Citic hit by Qingdao metals scandal
Unit of state-owned giant moves to secure assets as port concerns slow foreign exchange inflows
Citic Resources yesterday said the metal it owns at Qingdao port may be affected by a probe into suspected fraud, the latest firm caught up in a scandal that has raised broader worries about the risks of metal financing in China.
The probe at the mainland port, where a third-party firm is suspected of using single cargoes of metal multiple times to obtain financing, has also shaken markets and pushed down copper prices amid fears the problems could extend to other ports and force a crackdown on using metal as collateral for finance.
At present, the status of the investigation is unknown to the group
The investigation into the status of aluminium and copper products stored at the world's seventh-biggest port may hit the group, Citic Resources said, sending its shares down by more than 8 per cent to their lowest since May 7. The firm said it has sought a court order in Qingdao to secure its metal assets.
Citic Resources is the commodities trading unit of China's biggest and oldest state-owned financial conglomerate company, Citic Group. Singapore sovereign wealth fund Temasek Holdings also holds an 11.46 per cent stake in the unit.
"At present, the status of the investigation is unknown to the group," chairman Peter Kwok Viem said in a filing to the Hong Kong stock exchange. "Until the status of the investigation is clarified, the company is not able to accurately assess its impact on the group's alumina and copper stored at Qingdao port or on the group itself."
The city's police are investigating a private metals trading firm, Decheng Mining, over a suspected metal financing scam at the port, two police sources with direct knowledge said.
"Decheng is under investigation for its financing activities at Qingdao Port," a police officer involved in the investigation told Reuters. The officer asked not to be identified.