Losses in suspected China metals fraud top R13bln

Industrial and Commercial Bank of China, the country's largest bank, suffered a loss of less than $200 million to take a spot among the worst hit banks and trading houses impacted by a suspected fraud at China's Qingdao Port.

Chinese authorities in May launched an investigation into whether a private metals trading firm, Decheng Mining, and its related companies used fake warehouse receipts at Qingdao Port to obtain multiple loans secured against a single cargo of metal.

Metals are seen transported at Qingdao port, Shandong province. Credit: Reuters

The exposure of banks and trading firms, including CITIC Resources Holdings Ltd and Mercuria Energy Trading SA, could amount to more than $1.2 billion (R13 billion), according to an aggregation of amounts in company statements, reports and court documents.

Local media also said Decheng and its parent owed Chinese banks at least 16 billion yuan ($2.58 billion).

Decheng has not commented on the probe.

The new suits include a claim for $89.8 million plus interest and costs against the Australian trading arm of China's Citic Resources Holding Ltd for breach of contract.

The company has also launched action against Qingdao Port, the Chinese unit of Singapore logistics company CWT Commodities and Winfair Resources, a firm that specialises in alumina, aluminium and bauxite trade.

In a separate statement, it said it had filed for legal arbitration in disputes with units of Sinosteel for failing to deliver metal. Shanxi is claiming a total of $41.97 million in damages there.

The company said in June it was suing Decheng and its parent for more than $177 million in missed payments the two had guaranteed.

Pacorini said the port and relevant parties failed to deliver 8,085.189 tonnes of aluminium ingots and 112,731 tonnes of alumina, according to exchange statements.

The bank has asked the court to order Citic Australia to withdraw claims to the metal and to compensate the bank 1 million yuan ($162,680) for losses, according to exchange statements by Qingdao Port.

Zhong Jun Resources owes the lender $4.3 million, according to court documents.

It also has an exposure of $40 million worth of aluminium at other bonded warehouse facilities in Shandong province and has started legal proceedings to secure its position.

It has not stated the value of any potential exposure. - Reuters