Trafigura, the nickel fraud and the damage of over half a billion dollars – Corriere.it

Commodities trading giant Trafigura, based in Switzerland and Singapore, announced it had suffered a fraud in nickel supplies, which the company says could cost it more than half a billion dollars in losses. The news, anticipated by Wall Street Journalended up in the world’s most important economic media such as the Financial Times And Bloomberg. The company, which has steadily expanded its operations over the last decade to become a leading name in the global commodity market, allegedly suffered “systemic fraud” by companies it believes are controlled by Indian metal magnate Prateek Gupta, including Tmt Metals and subsidiaries of Ud Trading Group. «Trafigura – reports a note from the group – has recently discovered a systematic fraud committed by a group of companies related to and apparently controlled by Prateek Gupta, including Tmt Metals and companies owned by Ud Trading Group. The fraud involves containerized nickel in transit in 2022 and involved making false statements and submitting a number of false documents. Fraud is isolated to a specific line of business. We have found no evidence to suggest that anyone from Trafigura is involved in or complicit in this illegal activity. A thorough review is underway.”

Carbon steel instead of nickel

According to the Swiss company based in Singapore, maritime cargoes of nickel – a crucial material in the production of batteries for electric cars, worth 30,000 dollars a ton – would have started to suffer delays and shortages, with a series of unscheduled stops at several ports along the route before the planned arrival in Rotterdam. A series of cargo inspections would have led to the discovery of the replacement of nickel with carbon steel, of much lower value. “Since the end of December 2022 – continues the note – a small part of the containers purchased by these companies have been inspected once they have arrived at their destination and it has been found that they do not contain nickel. Most shipments remain in transit pending further inspections.

The legal action

Trafigura recorded a charge of $577 million in the first half of 2023, estimated as the maximum exposure to loss related to this alleged fraud. Despite the writedown, Trafigura expects the group’s net earnings in the first half of fiscal year 2023 to exceed net earnings in the first half of 2022. Trafigura announced it has filed a legal action against Gupta and the companies involved. As you remember the Wall Street Journalthe global metals market has already proven vulnerable to fraud: in 2014, for example, theabsence of copper cargoes in the Chinese port of Qingdao it triggered a series of lawsuits by banks that had financed commodity traders by accepting the metal as collateral.