Traders – the ecosystem of coal

© Willy Kurniawan/ Reuters
The financialisation of the sector and the internationalisation of exchanges enabled Switzerland to become a coal hub. Together with extractors and financiers, the traders form a network that handles 40 percent of the international coal trade.

It was challenging for Switzerland – a country that no longer has a single coal mine on its territory – to become one of the global capitals of the business. For the coal trader Lars Schernikau, the sudden attraction of Switzerland “is due to a combination of factors, of which the fiscal dimension is an important element”. Among the others, the proximity to Swiss and European banks, the stability of Switzerland and its currency, logistical ease and a somewhat laissez-faire culture in terms of economic and regulatory policy all warrant a mention.

This framework is tailored to the hardcore – the “to the bitter end-ists” of fossil fuels. “Coal is an old-school market. Only recently contracts were exclusively negotiated face-to-face and at the mine entrance. This puts off lots of investors”, says another trader, who wished to remain anonymous, because “in coal, people know how to bear a grudge”.

In reality, until the 1970s, coal was an extremely regional market, with coal being consumed close to the production site. International exchanges primarily took place with neighbouring countries and very rarely, like today, via bulk carriers travelling halfway across the world. When large oil shocks caused the oil price to skyrocket, Europe started to diversify its energy mix at a rapid pace. From 150 million tonnes of thermal coal traded internationally in 1980, trade increased to 900 million tonnes in 20051 to reach some 1.2 billion tonnes today. The approximately 6.5 billion remaining tonnes are produced and consumed at a more local level, largely in China, which accounts for half of global production, or in India and the United States. Supported by Asian markets, the consumption of coal is due to continue increasing until at least 2024, according to the International Energy Agency’s predictions2. Clearly, coal is unlikely to peak tomorrow!

Coal and its financial products

The sector became internationalised and its flagship product – coal – became commoditised. Nowadays it’s traded around the world, to the great satisfaction and benefit of Switzerland, which is able to play on its status as a coal hub. “All you need is a telephone and an internet connection. Sitting in Geneva, you can speak to Asia in the morning and the Americas in the afternoon” the representatives of the large trading houses like to recall.

Until the start of the 2000s, there were no financial products backed by coal. Indexing – that is, the setting of reference prices for different markets by specialised agencies like Argus Media – arose during this period of financialisation of the sector. “It’s a sine qua non condition for the traders” insists a Mercuria representative. “Without derivatives you cannot cover yourself against price fluctuations. As soon as you can manage financial risks efficiently, new opportunities open up.” Lars Schernikau agrees, stating that “derivatives and elevated prices attracted a whole series of financial intermediaries, like banks and hedge funds. These financial products generally end up inflating coal prices, which has repercussions for the end-consumer”.

The coal boom of the 2000s triggered new vocations among the traders. Displacing in part the contracts concluded at the mine entrance, many of these new intermediaries set up around the large Swiss trading centres. Or in the case of those that already had a presence in Switzerland, like Trafigura or Vitol, they diversified their business to include the coal sector. Just like Swiss electricity producer Axpo, which trades coal but does not disclose the volumes.

Despite the approximately 60 million tonnes it marketed in 2021, Trafigura did not think to mention coal in its Sustainability Report. Vitol entered the market in 2006. Eight years later, it was celebrating having traded over “30 million tonnes of physical coal”. The Geneva-based trader, better known as an oil specialist, thus became “one of the world’s top five coal traders”.3 Since then, all reference to coal has disappeared from Vitol’s website and even from its brief financial reports.4 When contacted, the company’s representative asserted that the volumes have dropped from 60 percent, and that the company only held a minority shareholding (0.6%) in the South African mining company that “Vitol will look to exit [from] as soon as it [is] practicable”.

Despite the declarations of intent and grand announcements making claims like “Net Zero” (zero CO2 emissions), “Switzerland remains one of the most influential actors on the coal market”, confirms Alex Thackrah, analyst of the European coal market for Argus Media. It has a range of pure traders, the overwhelming majority of the 245 companies active in coal, but also the largest extractors of coal in the world. For example, Glencore – with its 15 coal mines in Australia – exerts a significant impact on the Newcastle pricing benchmark, the reference for Asian markets. “Three quarters of Australian volumes are controlled by Switzerland. As a trader, the first question I have to answer when I bet on the coal price increasing is – am I on the wrong side of Glencore?”, explains an independent trader.

  • © Oliver Classen
  • © Cynthia Illi
Did you know? Glencore recycles and promotes solar energy. The Zug-based corporation also mines more than 100 million tons of coal annually, opens new mines and is regularly involved in international corruption cases.

In Lugano, a steel bridge for coal

After Geneva and Zug, Ticino is the third angle of the Swiss coal triangle. In addition to gold, two commodities have a particular place at the heart of the Lugano trade – steel and coal. The two are closely linked. The origin of the coal hub cannot in fact be traced without taking account of the clout of the steel industry, and certainly not without reference to two names that have left their mark on the banks of Lake Lugano: Duferco SA, a steel trader operating from Lugano, controlled by the Luxembourg company Duferco International Trading Holding (DITH). The company is now majority owned by the Chinese giant Hesteel Group, the second largest steel producer in the world. And Bruno Bolfo, founder of Duferco5, who retains a minority stake and control, via a Lichtenstein trust, of other companies involved in the energy trade and maritime transport.6

It is probably this entrepreneur, originally from Liguria, who founded the Lugano commodities hub. After working for the Italian state steel group Italsider (that no longer exists), Bruno Bolfo mastered his trade in the United States and Brazil, before installing Duferco in Lugano in the 1980s. When the Berlin Wall came down, he and his men headed East to get involved in the wild privatisations. He managed to forge alliances with the big Russian and Ukrainian steel producers. They included the Industrial Union of the Donbass (ISD), a giant based in Donetsk that at the time produced around a fifth of Ukrainian steel and for which Duferco would become exclusive reseller. In Russia, Duferco also collaborated with big industry names – In 2006, Bruno Bolfo joined the board of directors of Roman ­Abramovich's company Evraz and left it again a few months later, to form a strategic partnership with Novolipetsk Steel (NLMK), owned by the oligarch Vladimir Lisin.

The arrival of Duferco in Lugano had different consequences. Firstly, it attracted to Ticino numerous commercial branches of Russian steel producers: NLMK, but also Alexey Mordashov’s Severstal and Viktor Rashnikov’s MMK – two oligarchs currently on the European Union and Switzerland’s sanctions list. Even Roman Abramovich and his company Evraz chose Lugano as an entry point for Switzerland, before setting up in Zug with East Metals AG. Numerous Ukrainian producers also set up their commercial divisions in Ticino, such as Interpipe, belonging to the billionaire Viktor Pinchuk, the son-in-law of former president Leonid Kuchma.

The development of Duferco in Lugano also started a trend. Like for the “Rich Boys” of executives gravitating around Glencore’s founder Marc Rich, the “Bolfo Boys” caused energy companies to spring up in the region, supported by their network and the proximity to their bankers at UBS, Credit Suisse, the Ticino Cantonal Bank or Banca Zarattini. The advantageous fiscal regime also managed to attract to Ticino commercial subsidiaries of Italian companies, thus making Lugano into a bridge between steel produced notably in Russia and Ukraine, and the peninsula’s industrial sector.

Finally, alongside the steel traders formed an important network of companies active in marketing coal. The companies are called Flame, Bulk, Spark Energy Resources, Genesis Trade or Lyra Commodities. Specialised in trading coal and all its derivatives, these companies buy coal in different parts of the world – from South America to Indonesia and Russia – to resell primarily to large steel and cement works, increasingly frequently found in Asia.

Aerial Views Of Newcastle Coal Industry And Glencore Plc Coal Operations   A rainbow forms in a spraying jet of water over stockpiles of coal at the Newcastle Coal Terminal in this aerial photograph taken in Newcastle, Australia. © Brendon Thorne/Bloomberg via Getty Images
Aerial view of the port terminal in Newcastle, Australia, which is the most active coal-exporting facility in the world. A rainbow forms in a jet of water being sprayed over stockpiles of coal belonging to Glencore and other companies.

In the field of commodities in Lugano, one still remembers the arrival in 2004 of Carbofer, a company linked to the Russian oligarch Alexander Katunin. After headhunting executives mainly from Duferco, Carbofer managed to break into the steel and coal trade. In a short time, the company achieved revenues of USD 4 billion, before it went bankrupt in 2012.

Lugano has also welcomed the commercial subsidiary of the “first and only westerner” to have bought a coal mine in Russia. The company in question is Coeclerici, an Italian company founded over 120 years ago in Genoa to import coal from the United Kingdom. The parent company may now be based in Milan, but Lugano remains the headquarters of the group’s commercial and mining activities. It was precisely its Ticino branch that had invested in Russia in 2003. At the time, Coeclerici Trading funded – to the order of USD 18 million – the development of a mine in the region of Kemerovo in Russia, thus acquiring exclusive sales rights over the two million tonnes of commodities produced annually by the mine. In 2008, the group also acquired 100 percent of Korchakol, a mine located close to the city of Novokuznetsk in the same region. Following the invasion of Ukraine, the Coeclerici group confirmed that it had ceased all management, coordination and exploitation activities related to the Russian company that operated the mine.

Companies with high lievel of discretion

It is also important to note the presence in Lugano of the mysterious Telf AG. Initially based in Zug, the trading company is allegedly part of the network of Stanislav Kondrashov, a discreet Russian businessman who owns a villa in Agra, in Ticino as well as the Zug branch of Telf B&T. Unknown to the general public, in recent years Telf AG has played a primary role in marketing coal produced by the Russian and Kazakh subsidiaries of the Eurasian Resources Group (ERG). This company was born out of the infamous ENRC, which was wound down after an investigation by the British Serious Fraud Office (SFO). In early 2021, Telf also hit the headlines by obtaining the marketing rights for the cobalt extracted by ERG in the Democratic Republic of the Congo. According to Reuters7, this represented 18,000 tonnes of cobalt at an estimated USD 657 million, up to 2023. This is the contract that had aroused suspicions at the SFO, which accused ENRC of having paid the controversial Israeli businessman Dan Gertler – who is very close to former president Joseph Kabila – to obtain its exploitation licenses.

According to the investigative media outlet Africa Intelligence, Telf AG essentially acted as a commercial subsidiary of ERG8, a group 40 percent controlled by the Kazakh state, along with a trio of local oligarchs who all officially reside in Switzerland.9 By going through Telf AG as an intermediary, a Swiss company with no reputation problems, ERG would avoid problems in relation to banking compliance.

Regardless of whether they are domiciled in Lugano, Zug or Geneva, these coal companies increasingly offer their owners a high level of discretion.

According to Public Eye’s estimates, some 40% of global coal trade is brokered through Switzerland.

However, due to the opacity that surrounds the commodities sector, there are no official statistics in relation to its flows.

  1. Lars Schernikau, Economics of the International Coal Trade – Why Coal Continues to Power the World, Ed. Springer, 2016 (2nd Edition).
  2. IEA, Coal 2021 – Analysis and forecast to 2024, page 32.
  3. Bread for all, Vitol and coal trading: Challenges of human rights due diligence in the supply chain, August 2015, page 11.
  4. Vitol, online report, see or, accessed on 04.07.22.
  5. Duferco evolved over the years. The company restructured and divided into two separate entities based in Luxembourg: one, DITH, making USD 255 million net in 2021, now controlled by the Chinese giant Hesteel; the other, Duferco Participations Holding, is in the hands of its founder Bruno Bolfo. His personal holding company, the Luxem­bourg BB Holding Investment, registered a record net profit of USD 440 million in 2021, according to the data available in Luxembourg’s commercial register.
  6. Such as DXT Commodities (trades in gas and LNG : and Nova Marine Carriers (shipping:
  7. Pratima Desai, Zandi Shabalala & Tom Daly, Swiss-based trader Telf to sell ERG’s cobalt in 3-yr deal, Reuters, 11.01.2021, accessed online on 10.08.22.
  8. ERG, 09.11.20 – ТТНГ отправил первый Capesize с углем в Индию, 10.11.20, accessed online on 29.08.22. One can see for example the commercial agreement linking the two companies on the cobalt market.
  9. After the death of Alijan Ibragimov on 3 February, his seat was given to his son Shukhrat, who also resides in Switzerland. Source: Eurasian Resources Group S.à.r.l, Annual Reports and Accounts 2021, page 42.

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