In an incredible case that sounds like a global bank ordering rare earth metals from wish.com, it’s been reported that financial services firm and major American bank, JPMorgan Chase, has purchased what they understood to be US$1.3 million (AU$1.9 million) worth of nickel only to be brutally reality-checked by bags filled with stones.
According to a report from The Wall Street Journal, a warehouse in Rotterdam uncovered the case of mistaken bag identity at the end of last week, which was announced to the market by the London Metal Exchange without specifying the location of the bags of stones or their owner. It has since been revealed by the WSJ that said owner is indeed JPMorgan Chase, which had been using the warehouse as a holding facility for what they believed to be 54 metric tons of nickel.
The discovery shouldn’t impact the overall market for the rare earth metal that’s a critical component in batteries and EVs, as the missing amount represents just 0.14% of nickel inventories. The warehouse responsible for storing the supposed nickel is owned by logistics firm Access World (in turn owned by mining and trading giant Glencore PLC) and is likely to be responsible for picking up the tab for the missing element.
“Access World confirms it is currently undertaking inspections of warranted bags of nickel briquettes at all locations and will engage external surveyors to assist,” a spokesperson for Access World told Business Insider.
“In the meantime based on internal stock checks all information indicates that the underlying issue which led to the suspension of the 9 warrants referenced in LME notice 23/044 is an isolated case and specific to one warehouse in Rotterdam.”
In the context of the financial sector’s ongoing turmoil, what with the closures of numerous American banks and the recent acquisition of Credit Suisse by USB, it’s an insight into the complexity of investing in global markets and the apparently limitless ways things can go wrong. Including accidentally purchasing tons of gravel instead of precious minerals.
