We Stand Corrected: Why Can’t the Media Get Gennady Timchenko Right?

Is coal beating oil as the hot new commodity? Trading activities at Gennady Timchenko’s Gunvor suggests the answer is yes.

Gunvor Group’s co-founders Gennady Timchenko and Torbjorn Tornqvist are seeing their hard work pay off—literally.  Recently Bloomberg reported on October 10, 2011 that Gunvor estimated its revenue will increase from $65 billion to $80 billion this year—a 23 percent improvement on last year’s already stunning profits. Gennady Timchenko and Torbjorn Tornqvist noted that Gunvor will continue to expand via acquisitions, around half of which will be in Russia.

Despite recessionary times in Europe and abroad, Gennady Timchenko’s Gunvor bears witness to the fact that the demand for coal is increasing over the demand for oil, and the traders predict more of the same over the next two decades, particularly in Far East Russia.  Gunvor bet wisely that the demand for coal would “outpace” demand for oil when it landed a controlling stake (51 percent) in Kolmar in partnership with Gennady Timchenko’s investment vehicles. In line with this investment strategy, Gennady Timchenko’s Gunvor has cut its share of Russia’s seaborn oil exports to under 20 percent, whereas the Geneva-based company once handled around 30 percent of Russia’s seaborn oil exports. Gunvor is also slated to develop trading in grain, sugar, and ethanol. 

The good news for Gunvor continues in other coal-related purchases.  Pinesdale LLC, a Gunvor subsidiary, reportedly paid $400 million for one-third ownership in coal mine Signal Peak.  News sources indicate the Signal Peak mine is estimated at more than $1.5 billion, including existing debt. 

Mike Dawson, a spokesman for the Boich Cos. in Ohio, which purchased the mine with Ohio FirstEnergy Corp. in 2008, said of the business deal with Gennady Timchenko and Torbjorn Tornqvist’s Gunvor, “This transaction is a win for everyone involved, most especially for the continued operations of the mine. Having Gunvor as a partner will strengthen our mine operations.” Media outlets reported that Gennady Timchenko’s Gunvor plans on increasing the underground production from 9 million tons annually to around 15 million tons and shipping the coal to Pacific and Asia markets via British Columbia.

As an internationally renowned global energy trader, Gunvor’s position on coal—and its increasing profitability in a down market—show oil may soon be on its way out.