Rising Nickel Prices Fueling Scams... Swiss Company Loses $600 Million

World's Largest Commodity Trader Trafigura
Defrauded by Indian Businessman
Container Opened to Find Cheap Metals Instead of Nickel
Metal Trading Market Tarnished by Fraud

[Asia Economy Reporter Haeyoung Kwon] Trafigura, the world's largest commodity trading intermediary based in Switzerland, has fallen victim to a nickel scam. The scale of the damage is estimated at around $600 million. As demand for raw materials, including nickel used in electric vehicle batteries, rises, metal-related fraud is also on the rise.

According to Bloomberg on the 9th (local time), Trafigura announced that it had signed nickel purchase contracts with Indian companies TMT Metal and UD Trading Group but was subjected to an organized fraud and has initiated legal action.

The company had conducted multiple transactions since 2015 with these companies owned by Indian businessman Paratek Gupta.

The recent problematic nickel transaction was one of them. According to this deal, Trafigura employees opened a container that arrived at the Port of Rotterdam in the Netherlands on Christmas Day last year. However, the container was filled only with cheap metals. The nickel was nowhere to be found. The Wall Street Journal (WSJ) and Bloomberg reported that multiple attempts to contact the companies owned by Paratek Gupta were unsuccessful.

Trafigura stated that this fraud incident caused a loss of $577 million (approximately 730 billion KRW). The company explained that the loss would decrease if the damages were recovered through legal procedures.

However, the trustworthiness of Trafigura, which has grown into one of the world's largest commodity intermediaries over the past decade, has also been damaged. The head of Trafigura's nickel and cobalt trading division ultimately decided to leave the company.

Nickel, along with lithium and cobalt, is a key material for electric vehicle batteries and has recently become a target for fraudsters as its price soars worldwide. In February last year, prices surged due to concerns over supply disruptions from Russia, a major producer, following the Ukraine war. On the 9th (local time), nickel closed at $28,952 per ton on the London Metal Exchange. Although it calmed down after reaching the $48,000 range immediately after the Ukraine war, it still rose more than 20% compared to February 10 last year ($23,886), before the war broke out.

While prices have soared, the fact that security procedures during shipment are not as strict as those for gold is also analyzed to be encouraging fraudsters' activities. Bloomberg pointed out, "Nickel is worth $500,000 per container, but it is traded in large quantities without the strict security procedures required for precious metals like gold."

This incident has left another blemish on the global commodity trading market. Previously, Glencore, another global commodity trading intermediary, halted shipments to Chinese metal traders after $500 million worth of copper disappeared in northern China. In 2014, a copper trading scam occurred at the Port of Qingdao, China. After purchasing copper, the container that arrived was opened, but no copper was inside. This led to a series of lawsuits by financial institutions against investors who had taken loans secured by copper. Foreign media reported that this incident is expected to further shake the metal trading market, which is already rife with various 'theories' such as fake warehouse receipts, copies of shipping documents, and rocks painted to look like metal.

This content was produced with the assistance of AI translation services.