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SOUTH AFRICAN NATIONAL COMMODITY EXCHANGE

Why Ghost products?

I have been fascinated and puzzled by this question, why Ghost products for a long time now. I am sure that this question has puzzled you as well. I do not enjoy going to "Meetings" -also called TTM's (Table Top Meetings). Why, because they are a waste of valuable time and money! Question: If there was product at every TTM, would I be going to all TTM's. The answer is obviously, YES! Certainly, but what is the use of going to TTM  to TTM with no Deals closed. A friend of mine have been to more than 250 meetings (TTM's) and NO deals done. The question is why??


Case One

Ok so the guys run around like Chickens without heads. NCNDA's have been signed by all Intermediaries, Buyer and Seller Mandates and commissions carefully calculated. Often many hours have been spent beforehand arguing on Telephones, Skype and emails about fair commissions and now the IMFPA (Master Fee Protection agreements) have been signed by all except the Buyers and Sellers.

Many People involved often fly from Cape Town or Durban to Pretoria or Johannesburg (normally Sandton) to attend these closings meetings. Others come from Polokwane (Pietersburg) or Nelspruit, Mpumalanga or the Eastern Cape, excited to come to this TTM to close the deal. The opportunity of their lives, The one big break they have been waiting and worked on for so long. The night before they do not sleep a wink, excited about "the big deal" being closed tomorrow.

Everyone arrive at the venue an half an hour before the time. The Boardroom fills up and people you have never seen in your life, arrive by Cars, Taxis and Bus. Who are they you think and wonder. How do they all fit it? Surely you will not need to share your 0.5% commissions with any of these guys? The Pre-Meetings starts and you soon realize that all these guys honestly believe that they are squarely involved in the transaction and will have to be paid a large chunk of the tiny bit of comms payable. Everyone are excited and share many exchange their Business cards with everyone present.

The truth soon dawns-17 people have claim on the tiny 3.5%  commission allotment. Some claim to know Peter, and Andrew explains that he had sent the lead though to Anthony. Christopher explains that he had given a number to John and that's how he is involved. A Mess and everyone present is disappointed and sad. Some guys get Angry and one woman shouts at the guy who sent her the IMFPA. Well, now I will still at least get 0.11%-it is still better than nothing you think. Your wife will be proud of you and you will be able to buy your wife a better car from all the comms you will earn.

The main meeting starts and the convener, also a person you have never seen or heard of in your life chairs the meeting. We are just waiting for the Seller, he is on his way he announces. Everyone waits, a half an hour turns to an hour. The Buyers Lawyer explains that he can only wait another half an hour before he will need to leave for a another meeting (the Buyer has sent his lawyer or Mandate). So the Buyer is not there and the Seller is on his way, but all will be ok! Two hours later the "Seller" arrive. Another Mandate holder. You know the guy and he is most definitely not the Mine owner. No one else knows it. The "Buyers" and "Sellers" with permission exchange phone numbers and email addresses.

He opens his brief case and take out a thin file with few sheets of paper in it. Here is our POP (proof of Product) he announces and share the 5 pages between the 17 guys present. It is not a proper document. It has no Specs on it, nor is there the name of a mine, has copies of SGS information obtained from the internet, no TFR (Transnet Freight Rail) numbers but it does have some RBCT (Richards Bay Coal Terminal) numbers typed at the bottom. The only bit of info, but the RBCT info is wrong and definitely refers to an old number you have seen on a document 3 months before.

Another Fake! This is not POP. The Buyers mandate looks at the document and shares his disappointment. "The POP is meaningless and I will not be able to show my Buyers' Proof of Funds" (POF) he says in a clearly disappointed voice. "You have wasted my time. I flew in from China and you have no POP. Who is going to pay my expenses?", he insist on knowing.

This is all the info the mine gave me the Sellers mandate replies. He gets up, dryly greet everyone and leaves the room. He has a copy of the NCNDA signed by everyone in his hands and the Business cards and numbers of the Buyers. He also have the names and Numbers of the Buyers mandate. Mission completed for him.

Everyone greets each other, happy to at least have met each other. Good contacts for the next possible commodity transaction. You take the Taxi to the Airport and fly back home, empty handed with no closed deal. Money, time and energy wasted! The Question is Why?


Case Two

A Fellow commodity Broker, a real nice chap calls me. I know him quite well already. We have spoken many times on the phone. He knows I am a serious guy who has no time to waste. He has Chrome available from STEELPOORT. Wow!

I am excited, The product seems great, the volume is not too much. The price is right. I request the Contract and LAB report. We agree about a fair comms distribution. The contract arrives. The CR2O3 is exactly 43.7%. I have seen this exact figure on no less than 15 contracts offered us in the past two weeks (this is simply not possible). Another Fake Contract. The Sellers want us to get the Buyer to complete and Sign the Contract and return it to them by email. The Sellers sections are not completed at all. There is no Sellers name on top of the Contract. No Contact numbers or email address. The Photos arrive in a separate attachment. I open it and much is my surprise to see the photos my best friend in Commodities took of a Chrome stockpile  in Rustenburg two weeks ago.

So, another Fake offer! The Question is Why?


This week alone we have been offered TWO 500 000 A Grade FOB transactions and today we have received another 750 000 Offer.

The One Mandate explains that the One mine is Exxaro. The other Mandate explains that he knows the Mine owner personally. Last week we received a 80 000 and a 250 000 FOB offer. Great deals but do they really exist? We all know that their are no 500 000 Coal Deals. RBCT only exports 61.9 Million tons per year. If these few deals offered us really exists, it will mean 1.33m Tons per month or 16 Million tons per annum (one quarter of the Volume RBCT currently exports per annum). It is all Fakes you say! Perhaps so, perhaps not! Big deals does exists and I can prove it and have seen them with my own eyes (yes not from one single mine but from Mining Groups). The problem is that deals make the guys run around like crazy, ready to close their "Big One"/ Greed and desire for financial Freedom makes the guys to work hard!

The Problem is -they do not close deals! Why not we ask? What is the reason?

We call it Ghost Coal or Ghost Chrome or Ghost Commodities!!

Where does it come from? Why does it happen?

I would like to share my personal perspective with you. This is in no means conclusive or necessarily true, nor is it the only reasons. It is only my personal views and perceptions.
We would the like to then invite you to participate by giving your Reasons and perspectives to us by email.

1. The Coal (product) is already sold. Brokers receive the product from a friend. The Friend assure the Broker that it exists. The Broker then forward it to a friend of his whom he believe can help him find Buyers. The latest friend in the process is on holiday overseas for a month and when he returns see the email. He decide to forward it to his best friend. He offers it to you! Excited about the new product on offer you offer it to your most valued Buyer. He has proven to you that he has the Money to buy the Product. Unbeknown to you all the product was Sold the Second day after the process started.

2. The product is Fabricated in a Luxury Hotel Room around Breakfast. The Mine needs Buyers, They have just bought Greenfields and are ready to open up new sections. It will cost a lot and new equipment will need to be purchased and staff trained and employed. How can we find Buyers, the Mine owners wonder.  We do not yet have Proper Lab reports,  Rail or Slots. One good, ale Buyer will make it possible for us to secure the Funding OR we can bring such Buyer in as a financial Partner. So, "fake product" is offered though friends and contacts. This will generate Buyers. The Mine owners decide to make it very appetizing for the Commodity Brokers by offering a Large Quantity -say 450 000 or 500 000. One Guy suggest 750 000 and all agree. On Monday morning the offer lands on your desk. You offer it to some friends and not very long afterwards the fish grabs the Bait. The Buyers can buy it all and will show Proof of Funds at the TTM. Everything goes according to plan and Case One (see above) plays off.

The Mines lawyer leaves the meeting with the Contact number and email address of the Buyer. He has been offered R500 000 to get the name of a good, able Buyer (s). He has succeeded. The Mine receives the name and do a deal directly with the Buyer.

In the meantime you and I are back at home chasing the next deal and knows none the better of what has transpired behind our backs.

3. The Guy is unemployed and Need Product to sell.  He approach mine after mine for weeks on end, asking permission to sell their products. The mines answer is the same every time! Bring us Buyers with Real money and you can do the deal. He ask for a Mandate, but the reply remains the same, Bring us real Buyers with funds. Once again, product is copied from old contracts he received weeks before. FCO documents are sanitized and forwarded to unsuspecting Brokers and Mandates. Some go as far as emailing request for Attestation from the Buyers. None of these Fake documents are signed by any Mines or Sellers. Their is no mine who can sign the Attestation from the Sellers side. Some innocent, inexperienced commodity Broker forward the "attestation" to his friends or Buyers. The Buyer is a genuine Buyer and does not really care. He has the money and completes the Attestation of Funds document. He is tired of the mess in South Africa. He has been here for SIX months already and have had NO joy in getting product.

The inexperienced Broker excitedly receive the signed Attestation of Funds agreement back from the Buyers and forward it to the "Fake Seller" after the Fake signed the NCNDA. The Commodity Broker feel secure since the NCNDA "will protect him"? The Fake Seller goes to the mine with the original attestation document in hand, and hands it confidentially to the mine. Eventually the mine is happy and give him the POP to get the Buyers at the mine. The deal is concluded, direct at the mine between the Fake, the Mine and the Buyers.

You have just been circumvented. Next month he drives a big, brand new Mercedes Benz and buys each member of his family a lovely home. This happens everyday behind our backs!

They want the Names and numbers of your Buyers!!

 - This is the main issue I believe!


How can we prevent this from happening to us will be addressed in a follow up article. Please send your comments and feedback to us by email to louis@listall.co.za . If this has been of value to you, do let us know please!


S.A.N.C.E. (the South African National Commodity Exchange) have been growing from strength to strength and in stature from day to day. We are being approached by Mines, Commodity traders, Brokers, Buyers and Sellers on a daily basis. Everyone seems to know that this is the best way to Find products, and for Sellers to sell their Products quickly.

SANCE endorses our Members and affiliates. This give everyone who has chosen to be part of SANCE a competitive edge in the Industry. If you have not yet made up your mind to join the Commodity Exchange, please do so today. Simply fill in the little form provided on www.Sance.co.za, make your payment and send a copy of your ID and a recent Passport photo.

We assist Buyers, Sellers, Mandates and Intermediaries (commodity Brokers) to succeed. We will help you find product and Buyers - the correct legitimate way!


Links: Manganese for sale, Mines for Sale, Coal Peas, Mines wanted Coal for Sale, Slots RBCT, Coal slots wanted

Contact: Louis Kearney
Chairman/Voorsitter
      

S.A.N.C.E.
  (The South African National Commodity Exchange)
Register as a SANCE Broker today at www.SANCE.co.za

Office: +27(0)12-751 6050
Fax: 0866 124 303
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