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??
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
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
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
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?
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
nor is it the only reasons. It is only my personal views and
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
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!!
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
firstname.lastname@example.org . If this
has been of value to you, do let us know please!
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