A blanket impairment on Chile copper and the first net loss in 18 years (2020)

The trading house that bets on resources, and its control

What this decision reflects is the constitution of a general trading house whose consolidated profit and loss directly absorbs the resource markets. Interests acquired at high valuations in a boom rebound as impairments once the market turns. The Kakinoki regime’s blanket impairment can be read as a judgment tilted more to defence than to offence: at the milestone of taking office, it cleared in a single batch the latent losses carried over from the previous tenures. The lightness of having set the baggage of the past down — even at the cost of a large loss — became the ground for the subsequent V-shaped recovery and for the rebuilding of investment discipline. That it moved to clean up pushed by a sudden market slump, rather than lancing the boil while the good times lasted, is where the character of this judgment shows.

That said, the tilt toward resources itself has not vanished. As the expansion of Centinela shows, Marubeni still bets on copper — a market commodity — while facing resources by offloading that risk onto outside capital. The investment discipline that turned the impairment into an institutional lesson also became a premise for the growth investment that the successor president, Omoto Masayuki, now espouses. Earning on resources, sinking on resources, and turning back to resources again — the question of how a trading house comes to terms with the market cycle still remains in Marubeni’s management.