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The quiet Australian: Trafigura's new chief cut from a different cloth

Jeremy Weir, incoming chief executive for Trafigura, is seen in an undated handout picture. REUTERS/Trafigura/Handout via Reuters
Jeremy Weir, incoming chief executive for Trafigura, is seen in an undated handout picture. REUTERS/Trafigura/Handout via Reuters

By Josephine Mason

NEW YORK (Reuters) - For decades, Trafigura's co-founder and Chief Executive Officer Claude Dauphin has been the epitome of the successful commodity trader, a demanding workaholic who traveled to harsh frontiers in search of raw materials to sell at a profit.

In naming his successor, the 63-year-old Frenchman is now shattering that mold. He has picked a mild-mannered Australian geologist with a banking background to succeed him as chief executive of one of the world's largest traders of oil, metals and minerals.

In an abrupt change at the helm, Trafigura announced on Monday that Jeremy Weir, 50, previously the head of mining and market risk, will handle day-to-day operations. Dauphin, who co-founded the company in 1993, will step down due to an unspecified illness but remain as executive chairman.

The handover was at once surprising and, on reflection, inevitable, according to half a dozen senior traders and top rivals who know the two men.

Some had expected Dauphin to anoint as his successor a younger trailblazer who, like him, had toiled at the coal face of modern-day commodity trading, building relationships with resource-rich leaders and moving physical minerals around the globe.

In the early years, Trafigura and rivals such as Glencore and Vitol often got their first footholds in a market by going where larger firms feared to tread.

Instead he chose Weir, who joined in 2001 from one of the world's oldest investment banks and worked his way quickly up to the hedge fund and management board.

Yet the appointment also marks a logical strategic and cultural shift as Swiss-based Trafigura enters its third decade, a far cry from the rough-and-tumble dealings that prevailed when Dauphin started the firm after breaking ties with the godfather of contemporary oil trading Marc Rich.

Alongside its traders' smarts, it has a vast portfolio of assets from African petrol stations, Texas docks to a Brazilian port and iron ore terminal, a private equity vehicle, vast offtake deals and almost 9,000 employees across 58 countries.

"Claude's a trader. If you cut him through, it says trader," says one person who has worked for Dauphin and knows Weir. "Jeremy's a banker and a good manager."

FROM ZINC ONWARD

Both men began their careers dealing with zinc, a relatively obscure but lucrative trading niche: Dauphin ran Mark Rich's lead and zinc business in Bolivia for five years in the late 1970s. Weir cut his teeth at a now-defunct zinc miner in Australia. But the similarities seem to end there.

Dauphin, now one of the most famous names in oil trading, spent 40 years traveling the world to put together deals for everything from Congolese copper to Nigerian oil.

For six months in 2006-07, the billionaire - estimated by Forbes to be the world's 36th richest Frenchman - spent almost six months behind bars in Ivory Coast in pre-trial detention involving a dispute over toxic waste dumping.

Trafigura paid a $200 million settlement and the country's prosecutor declared that there was no evidence of any illegality or misconduct by any Trafigura company or staff.

In one of his only public statements, Dauphin called it a "terrible ordeal." Trafigura has adopted a more open approach since the episode, which drew political, legal and public scrutiny, yet Dauphin has remained fiercely private.

Those who met or worked with him say his focus is singular: building Trafigura. Total turnover has surged more than 10-fold in the past decade, and nearly trebled since 2009 to reach $133 billion last year. Owning less than 20 percent of the company, his net worth was estimated by Forbes at $1.12 billion.

One senior executive who sat next to Dauphin at a dinner during London Metal Exchange week several years ago said the conversation had one topic: "business, business, business."

Spending half the year criss-crossing the globe on one of the Trafigura jets, he expects his traders to keep up with his ferocious pace, sources who have worked with the company say. His current illness, which the company has not specified, has grounded him, however, a source familiar with the company said.

EASY GOING

While Dauphin built his career by getting his hands dirty with raw materials, Weir took a different path.

After studying geology at the University of Melbourne in the 1980s, he shifted toward the derivatives side of the commodity business. He ran the hedging book for mid-sized Australian miner Pasminco before working nine years for storied investment bank N.M.Rothschild & Sons in Australia and later London.

Here he showed at least one trait in common with Dauphin: ambition.

"He's an extremely bright Australian with all the laidbackness that that implies, except that he's very focused on his career development," said Geoffrey Sambrook, a veteran trader who worked for Weir in the 1990s at Rothschild.

When Weir joined in 2001 as head of metal derivatives trading, structured products and risk management, Trafigura was still a minnow focused mainly on oil and traditional base metals. But its owners had big ambitions to challenge Glencore as the world's largest, most diversified natural resources company.

Just two years after joining, Dauphin put Weir in charge of launching the firm's alternative investment vehicle Galena Asset Management, which included a multibillion-dollar hedge fund.

As Galena chief executive, he has overseen one of the boldest moves by Trafigura to diversify from pure physical trading, by launching a private equity fund, increasing trade finance business and investing in mining projects.

He's also been lucky. The business has filled a gap left by European and U.S. banks retreating as regulatory scrutiny of physical trading has curbed their appetite for risk. Weir joined the Trafigura management board in 2008.

STYLE CHANGE

People who have worked with or know Weir say he is easy going and approachable. He is equally comfortable in the office or at client dinners chatting about sports, particularly rugby, one of his homeland's favorite past times.

Sources say Weir also has a softer management style that sets him apart from his boss's brash old-school approach and fierce temper, which sources say has been displayed in the office when traders are not considered to be performing.

From mine economics to mergers, the incoming CEO has already proven his bona fides helping run companies such as Cadillac Ventures Inc , a small Toronto-listed copper exploration company in which Trafigura owns roughly 25 percent.

"Jeremy's a very good businessman and very sound geologically," said Maurice Stekel, a business consultant and Cadillac board member. "He can definitely put the two ends together."

(Additional reporting by Euan Rocha in Toronto; Editing by Jonathan Leff and Lisa Shumaker)

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