Non-Ferrous Metals Trade Finance (SIC 07290)

Mark Abrams

Mark heads up the trade finance offering at TFG where his team focuses on bringing in alternative structured finance to international trading companies.

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Benefits

Manage supply chains and trade cycles effectively
Invest to grow in a volatile but profitable market
Expertise and monitoring to de-risk large venture

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Content

What is Non-Ferrous Metals Trade Finance?

Non-ferrous metals trade finance provides finance to businesses conducting international transactions involving any kind of metal commodity which does not contain iron in appreciable amounts. Trade Finance Global has helped a large number of clients trading in these commodities to conduct secure, profitable international ventures by providing finance, tools and expertise to support their transactions. By partnering with trade financiers, potential opportunities in commodities trade can be converted into profits, and many of the risks inherent in the sector can be mitigated.

Non-Ferrous Metals Trade Finance

Non-ferrous metals brought positive returns for extractors, traders and investors in 2017. Global demand for aluminium continues to be strong despite the US decision to impose tariffs on imports of the metal, as China’s domestic production levels remain steady. Key metals used for battery components such as cobalt and lithium surged in value as the major carmakers drove demand, and the copper market has stabilised after several years of volatility.

Trade Finance Global has provided assistance to a wide variety of commodities traders struggling with two key issues; constricted cashflow, and systemic operational risk. Regarding the first, the non-ferrous metals industry requires immense amounts of capital, physical and digital infrastructure to extract, process and transport receivables around the world to service its global customer base. The lengthy trade cycles these movements can cause can land such firms with major cashflow restrictions which prevent them from maximising their businesses capabilities despite profitable opportunities existing in the market. Moreover, the extent of these firms supply chains can pose considerable operational risks to commodity traders, particularly the high-volume metals trade. Trade Finance Global can provide products to address both these issues.

Products financed

Key non-ferrous metals financed include:

Copper
Aluminium
Cobalt
Lithium
Zinc
Gold
Silver
Other non-ferrous metals

Metals Producer Finance Requirements

You are running an established, profitable commodities trading business
Your business is creditworthy (although you do not usually require high capital requirements to be approved for trade finance)
You have a clear business plan underpinning your venture

How the transaction works

To apply for trade finance, a straightforward credit application will be required, underpinned by a detailed overview of your current business and a clear plan for your proposed venture. After assessment by TFG’s expert financiers, we will work with our network of private financiers to construct a bespoke financial product on terms best suited to your cashflow and risk appetite. For commodity traders, these can include more complex structured commodity finance structures, or conventional loans backed by profitable accounts receivable. Once approved, TFG will oversee the proposed transaction, guaranteeing financial security to both buyer and seller through use of trade finance tools (such as letters of credit). As a result, buyers and sellers will receive the payment and goods they respectively require, with structured repayment terms tailored to the forwarding requirements of the buyer to enable them to realise a profit on their investment before repaying the loan.

What are the SIC Codes for trade in Non-Ferrous Metals?

SIC Code

24410

Precious metals production

Other SIC Codes that could also be used are:

A huge series of separate SIC codes exists to cover the full range of activities involving non-ferrous metals; from extraction to processing and casting, to wholesale.

Core extraction businesses for non-ferrous metals are all covered under one SIC code (07290) with an additional wide-ranging code covering support activities related to metals mining (09900).

Manufacturing, processing and casting activities involving these metals are subsequently covered under the following SIC codes. Further codes exist for the manufacture of specific products containing these metals, which are not included here.

24410 Precious metals production
24420 Aluminium production
24430 Lead, zinc and tin production
24440 Copper production
24450 Other non-ferrous metal production
24540 Casting of other non-ferrous metals
25500 Forging, pressing, stamping and roll-forming of metal; powder metallurgy
25610 Treatment and coating of metals

Finally, a number of codes exist for firms involved in the trade of non-ferrous metals. These include:

46120 Agents involved in the sale of fuels, ores, metals and industrial chemicals
46150 Agents involved in the sale of furniture, household goods, hardware and ironmongery
46720 Wholesale of metals and metal ores

The extraction, production and casting of iron and radioactive metals is covered in our separate guide to Iron, Uranium & Thorium Trade Finance.

Full tariff schedules for each non-ferrous metals ores and various forms of base metal can be found on gov.uk.

Case Study

Commodities Business, Non-ferrous Metals

A large firm reliant on the flow of commodities around the world required significant finance to invest in high-volume ventures to boost profitability. Trade Finance Global was able to structure an appropriate package which enabled the firm to capitalise on these opportunities.