HSBC releases base metal pledged for US$30m loan to Zhong Jun Resources

HSBC has released base metals used as collateral for commodity financing by Zhong Jun Resources, according to Company Registry documents obtained yesterday.

Zhong Jun is controlled by Chen Jihong, the Singaporean national who owns Decheng Mining and has been detained for his alleged role in the commodity financing scandal in Qingdao where metal was allegedly pledged to several banks for billions of yuan.

The documents show that the Hong Kong branches of Standard Chartered and BNP Paribas also set up trade finance arrangements with Zhong Jun that were backed by aluminium and alumina.

The two banks have not been able to release the pledged metals, as HSBC did.

A spokesman for HSBC declined to comment on whether the release of the pledged metals means repayment by the company or a write-off of the debt.

Documents filed by Zhong Jun to the Company Registry show HSBC arranged banking facilities of up to US$30 million with the pledged aluminium, alumina and copper in December last year. The bank also set up trade financing agreements with Zhong Jun with pledged trade documents and deposit account in mid-2013.

Decheng Mining reportedly pledged the same stockpile of aluminium, alumina and copper at Qingdao port multiple times for loans.