HONG KONG, July 9 (Reuters Basis Point) - Mercuria Energy Trading SA had alumina worth about $44 million stuck at China’s Qingdao Port, where an investigation into a suspected financing fraud has been taking place, according to four banking sources with direct knowledge of the situation.
The Swiss-based trader said in an email sent to its lenders in June that part of Qingdao port had been closed with only port authorities having access and that no stock was moving in or out, according to the sources.
The financing scandal at the world’s seventh-busiest port has left a string of global banks and trading houses scrambling to secure metal supplies. China’s CITIC Resources Holdings Ltd said on Tuesday it has started court proceedings against the operator of a bonded warehouse at Qingdao port.
Chinese authorities are investigating a private trading firm, Decheng Mining, that is suspected of duplicating warehouse certificates to use a metal cargo multiple times to raise funds. Decheng Mining has not commented on the probe.
About 20,000 tonnes of copper, nearly 100,000 tonnes of aluminium ingots and about 220,000 tonnes of alumina have been caught up in the probe, sources familiar with the matter have previously said.
Mercuria sent out emails on June 6 and June 13 to its banking syndicate in Asia to inform them of the situation, said the sources, who asked not to be named due to the sensitive nature of the situation.
In the emails, which were read out to Basis Point, the trading house said it had stocks of alumina at the port, which were valued at about $44 million.
This equates to about 135,000 tonnes of alumina at current, according to traders and Reuters calculations.
Asked for comment, Mercuria’s communications department said in an email that it was their policy not to comment on ongoing legal matters.
The banking sources are from a group of banks who lent $1 billion to Mercuria in November 2013.
A refinancing for the 2013 facility will likely be brought on the lenders’ agenda in the coming months, the sources said.
The warehouse scandal at Qingdao port would be a factor to be considered in deciding future lending to companies trading commodities, one of the sources added.
“The Qingdao Port issue will definitely affect our decision if upcoming financings are from Chinese companies,” one of the sources said. “If borrowers are multinational companies, we need to see how many commodities the borrowers have stored in Qingdao port.”
Australian and New Zealand Banking Group Ltd, Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, DBS Bank, Emirates NBD Singapore, First Gulf Bank Singapore, HSBC, Industrial & Commercial Bank of China London and Singapore, ING Bank, Rabobank, RBS, Societe Generale, Standard Chartered Bank, Sumitomo Mitsui Banking Corp and Bank of China were mandated lead arrangers and bookrunners of the $1 billion 2013 deal. (Editing by Sharon Klyne, Richard Pullin and Ed Davies)