The London Metal Exchange (LME) was obliged to delay resuming trading in the metal during Asian hours until March 27 after “irregularities” with bagged nickel briquettes were found at one of its warehouses this week.
The LME stated that nine nickel warrants at one of its sites had to be canceled since it was discovered that the bagged nickel briquettes held there did not meet the weight that was required in the contracts.
Systematic Fraud in Shipments
The statement from the exchange stated, “The exchange has received information that several physical nickel shipments out of one specific facility of an LME-licensed warehouse operator have been exposed to such abnormalities.
A warrant is equivalent to about six tonnes of the metal, therefore approximately 54 tonnes of nickel from the LME were impacted. This, according to the exchange, accounts for 0.14% of its live nickel inventory.
- The LME stated that nine nickel warrants at one of its sites had to be canceled.
- Approximately 54 tonnes of nickel from the LME were impacted.
- The LME has urged operators to double-check the stored warranted nickel.
- The company is facing millions of dollars in losses after it discovered “systematic fraud” in shipment.
The LME has urged operators to double-check the stored warranted nickel even though it has no reason to think that its other warehouses have been compromised. Metals that cannot be delivered in bags, it continued, “are not subject to this type of irregularity.”
Several media publications later claimed, citing sources, that the purported nickel bags were filled with stone. The exchange did not identify the facility or its location.
According to reports, the bogus nickel was kept at an Access World-run LME facility in Rotterdam. Access World declined to comment on the reports.
The announcement follows another nickel-related scandal at global trading powerhouse Trafigura. The company is facing millions of dollars in losses after claiming last month that it discovered “systematic fraud” in shipments that did not contain the metal stated in the contracts.
In response to the alleged fraud, Trafigura has filed a lawsuit against Indian metals tycoon Prateek Gupta and his firms.