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UPDATE 2-Goldman to wind down uranium desk; may sell Colombian coal mines -report
November 20, 2014 / 5:02 AM / 3 years ago

UPDATE 2-Goldman to wind down uranium desk; may sell Colombian coal mines -report

(Updates with Agran quotes paras 6-7)

NEW YORK, Nov 19 (Reuters) - Goldman Sachs will wind down its small uranium trading business after failing to find a buyer and may sell its Colombian coal mine subsidiary, two of its most controversial commodity divisions, according to a Senate report released on Wednesday.

Despite those moves and plans to sell its metals warehousing unit, Wall Street’s biggest trader reiterated that it “intended to remain active in the commodities business and will seek to continue its physical commodity activities,” according to a long-awaited Permanent Subcommittee On Investigations report.

The report, commissioned two years ago by outgoing Senator Carl Levin, shed new light on the depth and breadth of Wall Street’s dealings in the raw materials realm, including the new details about Goldman’s plans for its J Aron commodities broker franchise.

It included a lengthy summary of Goldman’s activities in the niche uranium market, which began when it bought Nufcor from Constellation Energy Group in 2009. Goldman and Deutsche Bank had been the only big banks active in the market.

Australia’s Macquarie Bank earlier this year bought Deutsche’s uranium book and hired one of Goldman’s two senior uranium traders, Jonathan Gaylard. It had previously considered buying Goldman’s book, but the deal fell apart.

In prepared remarks ahead of a Senate hearing on Thursday, co-head of Goldman Sachs’ Commodities Trading Gregory Agran said the uranium business had posed no environmental risks and the bank never took physical possession of the material.

“Notwithstanding these various considerations, given the misconceptions about this business, we have decided to manage down Nufcor’s assets to zero,” he will tell the committee.

Due to long-term supply contracts, Goldman will continue selling uranium to one power plant until 2018, according to the Senate report.

Goldman and Deutsche entered the uranium market in 2009, when tightening supplies threatened to send prices soaring before the Fukushima nuclear disaster in Japan. The two would grow to handle almost a third of all uranium trades in the spot market, according to sources.

Goldman’s trading of yellowcake, enriched uranium ore known as U308, rose tenfold from 2009 to reach 12.8 million pounds in 2013, according to the report. The value of its uranium inventories topped $240 million.

Goldman is also “considering selling” its coal mining subsidiary, Colombian National Resources (CNR), the report said. Goldman bought the mines in 2010 and 2012, but the investments have been troubled, the report stated. Because of new environmental regulations, CNR has not exported any coal since January.

The CNR investment is contentious because most banks are barred from investing and operating commercial businesses, but Goldman and Morgan Stanley have claimed a “grandfather” exemption for commodity-related investments because they were unregulated investment banks prior to 1999. (Reporting by Jonathan Leff; Editing by Steve Orlofsky and Alan Raybould)

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