New | Citic subsidiary faces more legal action over metals stored in Qingdao

Another company has joined the race to file lawsuits to secure rights to metals stored at Qingdao port, which has been at the centre of a fraud scandal.

Citic Resources said Shanxi Coal Import & Export, a subsidiary of Shanxi Coal International, had launched legal action against Citic Australia Commodity Trading, a trading firm owned by Citic Resources, for non-delivery of aluminium. It revealed the filing of the case, accepted by a court on Tuesday, in an announcement dated Wednesday that was filed with the Hong Kong stock exchange on Thursday morning.

Shanxi Coal Import & Export was claiming US$89.8 million in compensation for non-delivery, Citic Resources said, and had also obtained an asset protection order from the local court over a quantity of Citic Australia’s alumina and copper stored at bonded warehouses at Qingdao port.

Citic Resources said in June that a court had been unable to secure more than 120,000 tonnes of alumina worth about US$43 million stored at Qingdao port, one of the biggest ports in China, deepening fears that firms exposed to a metals financing scam at the port could face big losses.

The Chinese authorities started a fraud investigation in May and detained a cargo of alumina, aluminium and copper under the name of Qingdao Hongtu Logistics. The same cargo was allegedly pledged multiple times for loans. The investigation has triggered lawsuits from banks, trading companies and warehouses that had exposure to the metals stored in Qingdao port.

Citic Australia filed a lawsuit against port operator Qingdao Port International last month, demanding US$108 million in compensation if it fails to deliver base metals held by the authorities as part of the fraud investigation.