KEY POINTS
- Richard Holtum is set to become Trafigura’s third CEO after quickly ascending through the company’s ranks.
- Holtum faces declining profits, staff departures, and ongoing legal issues as he takes over leadership.
- Holtum sees LNG and gas as key drivers for Trafigura’s growth, calling it the “golden decade” for these sectors.
A few months ago, Richard Holtum, the incoming CEO of Trafigura, told the commodity trader’s staff in Singapore that it was time for them to set aside distractions and focus on making money. This statement was also confirmed by several attendees.
Holtum’s speech was laced with Gordon Gekko’s “Greed is Good” line from the movie Wall Street. 11 of his ex-colleagues spoke anonymously to Bloomberg saying that speech was in alignment with his person.
The 39-year-old has rapidly risen through the ranks at Trafigura and is set to become its third CEO. Holtum is famous for his ambition and sharp focus on profits.
Holtum joined Trafigura in 2014 as part of its junior trader program. By 2019, he was running its global gas business, which has since expanded to include power and renewable energy.
These sectors have become major profit drivers, fueled by the energy crisis following Russia’s invasion of Ukraine.
Trafigura’s growth and mounting challenges
Trafigura has not yet commented on Holtum’s speech but is preparing for Holtum’s leadership. Current CEO Jeremy Weir is expected to stay on as chairman.
“He’s had a stellar rise,” said Orhan Gunes, a commodity financier and CEO of TradeQraft. “To head a department so quickly and now the company is exceptional.”
Despite Tranfigura’s swift growth, the company has faced diverse challenges, including a drop in profits, trading issues, staff departures, and ongoing corruption allegations, with a trial in Switzerland involving its former chief operating officer.
Holtum’s background and career path
Few knew much about Holtum when Bloomberg first reported his candidacy for CEO earlier this year. Educated at Clifton College and St. Andrews, where he captained the polo club, Holtum went on to serve as a captain in the Royal Scots Dragoon Guards in Afghanistan.
He left the army to join Glencore’s oil division in 2012 before moving to Trafigura to help lead its growing liquefied natural gas (LNG) team.
Holtum’s leadership of the LNG team was prosperous. LNG was booming, and Russia’s invasion of Ukraine sent prices soaring. This delivered huge profits for those able to manage the risks. In 2022, he was promoted to global head of gas and power, joining the company’s management committee.
“He’s clever, and his division’s success was impressive,” said Jean-Francois Lambert, a consultant and former commodity banker. “That the next head of a major trading group is from gas and power shows where the future is headed.”
Holtum echoed that sentiment at a recent conference in Houston, saying, “We’re entering the golden decade of LNG and gas.”
Future vision and immediate challenges
Known for his strong interpersonal skills and creative dealmaking, Holtum is respected for finding ways to close deals, even if it means exploiting contractual loopholes to boost Trafigura’s profits.
His shared interests in shooting and polo have also helped him connect with senior Trafigura figures like Jose Larocca, a longtime oil executive and Olympic equestrian.
However, some insiders expected Hadi Hallouche, Holtum’s former superior, to become CEO. That changed last year after a power struggle resulted in Hallouche’s demotion.
Recently, Holtum has stepped more into his CEO-designate role, meeting with various commodity teams and discussing trading books, according to sources.
According to a report by Mining Weekly, Holtum will inherit challenges as Trafigura’s profits fall. The company’s half-year earnings to March 2023 dropped 73%, though from record levels.
It also faces issues like alleged nickel fraud and oil debt problems in Mongolia. Additionally, a wave of departures, including key figures like Larocca and Wainwright, the former COO facing trial in Switzerland, has complicated matters.
The company typically buys back shares from departing employees over four years. Holtum may struggle to maintain the pace of buybacks because of falling profits and an increase in exits. Delaying them, as done previously, is unlikely to be well-received by partners.
“Trafigura has been exceptionally profitable, but it is at a crossroads,” Gunes said. “The question is whether this new leadership can sustain that profitability. It’s a tough job.”
