Trafigura has alleged it has been the sufferer of a “systematic fraud” and faces a writedown in extra of half a billion {dollars} after discovering that shipments of nickel that it bought did not include the steel.
The commodity dealer stated in a press release on Thursday that it had not too long ago found the alleged fraud and had begun authorized motion towards a bunch of firms “related to and apparently managed” by Dubai-based metals dealer Prateek Gupta, together with TMT Metals and corporations owned by UD Buying and selling Group.
It added {that a} small proportion of containers bought from these firms had been inspected since December, and that they didn’t include nickel. It added that almost all of the shipments have been in transit and “awaiting additional inspection”.
The privately held group has shut relationships with dozen of banks that present billions of {dollars} of financing that assist underpin its each day operations.
An impairment cost of as much as $577mn will likely be recorded within the first half of 2023 associated to the alleged fraud, which Trafigura stated concerned “misrepresentation and presentation of a wide range of false documentation” by the businesses.
TMT Metals describes itself on its web site as a non-ferrous metals, minor metals and ferroalloys buying and selling service provider. TMT Metals, Gupta and UD Buying and selling didn’t instantly reply to requests for remark.
Nickel is essentially the most extremely valued base steel, buying and selling at greater than $28,000 per tonne in contrast with roughly $9,000 for copper.
The nickel market spiralled uncontrolled final yr following Russia’s invasion of Ukraine, prompting the London Steel Alternate to droop and cancel trades.
The impairment marks a probably vital hit to Trafigura’s earnings, equal to greater than 7 per cent of the file $7bn web revenue the corporate made in its 2022 monetary yr.
Trafigura stated, nevertheless, that its first-half revenue for 2023 was nonetheless anticipated to exceed that of the identical interval a yr earlier, suggesting the corporate is on track for an additional robust yr.
Trafigura’s earnings have surged lately on the again of more and more risky power markets.
