Goldman Sachs ends era in commodities with coal mine sale

Goldman Sachs Group closed a near 35-year era of investments in commodity assets such as power plants and refineries with the sale of a Colombian coal mine.

The disposal is the latest sign of how Wall Street banks are responding to pressure from US regulators and disappointing returns as raw materials prices plunged.

Goldman Sachs has invested in physical commodity assets since 1981, when it bought what was then a small trading house called J Aron. Over the years, the company has owned oil refineries in Rotterdam, power plants in Virginia and Colorado, and warehouses to store aluminium and copper around the world.

The US Federal Reserve has been working on a rule to rein in Wall Street ownership of commodity assets. Federal Reserve governor Daniel Tarullo, who is spearheading the Fed's regulatory efforts, questioned in March whether banks should be allowed to own such properties.

"They're the sort of things that are very hard to get a risk-management handle on as a banking regulator," he told a US Senate Banking Committee then.

The mine that Goldman Sachs sold to privately owned Murray Energy last week is the last holding the bank had in a commodities asset, according to a source.