Companies linked to Chinese nickel producer Tsingshan Holding Group lost more than US$7.3 billion of market value as investors reassess their ties after its wrong bets on the London Metal Exchange (LME). The firm said its business remains sound with state support behind it. Zhejiang Huayou Cobalt plunged by the daily 10 per cent limit for a second day on Wednesday in Shanghai, erasing 26 billion yuan (US$4.1 billion) of market capitalisation. The cobalt producer and Tsingshan have investments in a power project and a nickel-refining project in Indonesia, according to mainland media reports. China Molybdenum slid 3.9 per cent in Shanghai and 9 per cent in Hong Kong, while CNGR Advanced Material and GEM declined by more than 2 per cent in Shenzhen. Nickel Mines tumbled as much as 23 per cent in Sydney before trading was halted. The slump wiped out US$3.2 billion in value from the four companies. Tsingshan, the biggest producer of the metal used in electric-vehicle batteries , potentially suffered billions of losses for betting on a decline in prices, Bloomberg reported. Instead, nickel on LME surged this week to a record above US$110,000 per tonne, triggering massive margin calls. Tsingshan was said to have closed out part of its short positions on nickel contracts and was mulling whether to exit its bearish bets, Bloomberg reported late on Tuesday. The LME suspended trading on the contracts on Tuesday and cancelled some transactions after the price surged by as much as 250 per cent within 24 hours. Chinese tycoon behind big nickel short facing losses worth billions of dollars “Foreigners do have some actions and we are actively coordinating [with related parties],” China Business News cited Tsingshan chairman Xiang Guangda in an interview late on Tuesday. “I received many calls, and relevant state departments and leaders are very supportive of Tsingshan.” “Tsingshan is an excellent Chinese company and there are no problems with its positions and operations,” Xiang was also cited as saying. The 64-year-old self-made tycoon is credited with a US$1.2 billion fortune in Forbes ’s 2021 billionaire ranking. He started Tsingshan is Wenzhou city in eastern Zhejiang province in 1988, making stainless-steel products and produces raw materials used in car manufacturing. The firm employed 56,000 people and had an annual sales of US$28 billion in 2018 and generated US$826 million of profit in 2020, according to Forbes and other local media reports. The LME is owned by Hong Kong Exchanges and Clearing, or HKEX, which the city’s stock exchange operator bought for £1.4 billion (US$1.9 billion) in 2012. HKEX tumbled 2.1 per cent in a broadly weaker market on Wednesday. Huayou produces cobalt, a major metal used in EV batteries. Its business partnership with Tsingshan has accumulated a significant amount of receivables whose collection may be at risk, according to local media reports. Huayou was still verifying the reports and had nothing to disclose for now, according to a company official who declined to be identified when contacted by the Pos t on Wednesday. Nickel for three-month delivery last traded at US$48,063 per tonne in London, capping a 131 per cent rally this year. The spike is part of the rally in global commodities as the Russia-Ukraine war fanned worries about supply-chain breakdowns. Russia accounts for about 6 per cent of global nickel supply, according to UBS. Its total refined nickel exports reached 115,000 tonnes in 2020, with most ending up in mainland China for stainless-steel production, according to Rystad Energy senior analyst Susan Zou. Additional reporting by Iris Ouyang