Trafigura, the largest trading and property company, could lose more than half a billion dollars after it discovered that the assets it bought did not have the nickel they had agreed to, the company said on Thursday.
The company has initiated legal proceedings against a group of companies controlled by Prateek Gupta, including TMT Metals, for alleged fraudulent transactions, the company said. Trafigura recorded a $577M charge in H1 2023 due to significant losses related to the alleged fraud.
Beginning in late December 2022, a subset of containers purchased from Gupta-linked companies were inspected upon arrival at their destination and found to be nickel-free, Trafigura said.
Many shipments are still in transit awaiting review. “This fraud is isolated to one business. We have no evidence that anyone at Trafigura was involved or involved in illegal activities,” the company said.
Excluding the impairment, Trafigura’s profit for H1 2023 is expected to exceed the profit for H1 2022. “The group remains committed to establishing its presence in the fast-growing energy markets,” he said.
TMT Metals did not immediately respond to a request for comment from Seeking Alpha.
In March 2022, nickel was on the cusp of yet another drama, when the London Metal Exchange suspended trading in its nickel market due to a “recent increase” in the three-month nickel price, up to $100K/metric ton.
About a year ago, Trafigura reportedly ended talks with Blackstone ( BX ) for a $3B sale without a deal.