BME: CONSTANTLY EVOLVING TO MAXIMISE SHAREHOLDER VALUE

Founded in 1993; Shareholders; Directors

Bloomsbury Minerals Economics Ltd (BME) was founded twenty-six years ago, by Peter Hollands (then Research Director, now Chairman) and Barbara Sotowicz (then Sales Director, now Managing Director). They are the controlling shareholders. Barbara’s brother, the mathematician and price modeller Adam Sotowicz, is also a share-holder in BME, besides being Managing Director of Metal Price Analytics Ltd. Appointed in October 2018, Jonathan Barnes is a Non-Executive Director of BME and BME’s Non-Executive Director on the Board of Roskill.

In the Beginning: Monthly Copper Briefing Launched in September 1993

In 1993, BME launched the “Copper Briefing Service”, a 12-page monthly report in easy-access newsletter style but with rigorous forecasts two years ahead of mine, smelter & refinery production, and refined consumption, country-by-country and globally, global market balance and stocks, prices, plus treatment & refining charges (TC/RCs) for custom concentrates (copper in ore minerals) and RCs for blister (unrefined) copper. That was a level of analysis which BME supplied monthly that competitors only provided in quarterly reports: this was the first of its kind in metals. Twenty-six years ago, it was a fore-runner of today’s high-frequency or continuously updated analytical services.

Fundamentals-based Forecasting Models of Six Base Metals Introduced in 2001

In 2001, Adam Sotowicz began BME’s mathematical modelling of the cash prices and (uniquely at the time, we believe) forward spreads of copper, nickel, aluminium, zinc, lead and tin. Price drivers were the rate of global industrial production (IP) growth (based on a unique data series from CHR), LME stocks, exchange rates and, for the spreads, interest rates. At that time, there were two quite separate schools of thought on base metal prices. Single-metal specialists followed market balances and stocks, while multi-commodity analysts mostly believed in turning points in the global IP cycle. Adam’s models provided a breakthrough: they showed that it was the interaction between IP growth rates and stock levels that drove both prices and spreads – a unified theory of price.

A Step Up in Value: Trading Models and Expert Systems Introduced in 2004

That radical insight brought great clarity to BME’s forecasting of LME cash prices and forward spreads. This was widely noticed and, at the request of a Hedge Fund, a subsidiary, BME Price Models (BME PM), was set up in 2004 to provide traders with fundamentals-based models of prices and spreads for the LME metals, as well as Expert Systems that incorporated ‘Quant’ techniques to complement traditional technical analysis. From 2005, BME PM also became the first company to incorporate into its fundamentals-based models the impact of the financial community’s new investment vehicles in physical metals, futures and options, which introduced long-side bias to the market: a price bubble. The financial community’s long positions in commodities rose from $75 Bn in 2005 to $400 Bn in 2012.

Profits Reinvested in Mining-related News, Price, Map Businesses from 2006

Performance fees from the Hedge Funds models brought BME PM and BME itself profits that are believed by its founders to have exceeded both CRU’s and Brook Hunt’s (BME’s much larger rivals) for several years, and BME quietly became a significant investor in other companies servicing the metals, minerals and mining sectors, but outside price forecasting (of which BME was starting to take a jaundiced view, given the bubble which was then developing).

In 2006, BME bought into Mining Communications – the owner of Mining Journal and the Mines & Money conferences – when the venture capital shareholders were being bought out. In 2008, BME bought a 10% stake in FastMarkets, which ran the websites TheBullionDesk.com, BaseMetals.com and MinorMetals.com. In 2009, BME participated in a refinancing of Intierra, of Australia, which went on to acquire RMG and become IntierraRMG. Those companies went into trade sales as the investments matured. BME also bought its own office building in Fitzrovia, London.

Significant stake in Roskill bought in 2010

In 2010, BME bought a significant stake in the Roskill Group and now owns 38% of it. Over 2011-2016 Roskill’s reports were re-oriented towards market dynamics and forecasting, its data handling modernised, and sales and marketing functions greatly strengthened. In 2017, Roskill acquired the assets of Heinz H. Pariser Alloy Metals and Steel Market Research of Germany. The Roskill Group now comprises Roskill Holdings and four wholly owned subsidiaries: Roskill Information Services, Roskill Consulting Group, Roskill Pariser and Roskill (Shanghai) Business Consulting.

Roskill covers 40+ industries & commodities: electric vehicles (EVs), battery raw materials, tin, copper, hi-tech materials (including rare earths), steel & alloying elements, minor metals, industrial minerals, carbon & chemicals. It has built a conference business and in early 2018 entered the mine cost modelling and greenfield mine project appraisal fields. In late 2018, Roskill entered copper market analysis with a presentation by Jonathan Barnes on “Electric Vehicles: The Positive Future for Copper Demand” which was followed by a multi-client study on “Copper Demand to 2035”.

Mathematical Price Modelling Re-entered in 2019 Via Metal Price Analytics Ltd

In 2019, via its 25% shareholding in Adam Sotowicz’s company – Metal Price Analytics Ltd (MPA) – BME re-entered the price modelling of LME metals and other commodities. A model of the LME cash, three-months (3M) and fifteen months (15M) prices of tin and the spreads between them (3M-cash, 15M-3M and 15M-cash) was completed by MPA in December 2019. Using the model, clients can explore prospects for tin prices and spreads monthly to end-2022 and readily conduct their own scenario analysis. Models of aluminium, zinc and lead cash prices and forward spreads will follow in early 2020.

MPA can model the prices of other exchange traded commodities and some non-exchange-traded commodities (especially where there is a series for port stocks or similar), if clients provide the necessary data series.




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