NEWSBREAK: ABN AMRO files claims against copper smelter Dongying Fangyuan; founder ‘unreachable’

ABN AMRO Bank has filed a claim against China’s largest private copper smelter Dongying Fangyuan, according to a court document seen by Fastmarkets.

This is the first legal action from a foreign bank against the copper smelter, after a Chinese provincial court ruled to freeze part of its assets in December, and the Dutch lender has one of the biggest exposures to Dongying Fangyuan.

Numbered (2019) Shanghai 74 Civil first trial No 3482, the Shanghai Financial Court issued a complaint over the Dutch lender’s claim to two persons, namely Cui Zhixiang, founder of Dongying Fangyuan, and his wife Wang Cuiying on March 19.

The document mentioned that because both persons, as legal representatives of the companies, have been ‘unreachable’, the financial court issues a public notice.

The Shanghai branch of ABN AMRO Bank’s claim for close to $40 million was filed against two companies: Dongying Fangyuan Nonferrous Metals and Dongying Lufang Metals Material.

The principal amount of the loan amounted to $38.3 million, while the amount of interest due as of December 10, 2019, is $56,118.33, yet the compounded interest incurred since December 11, 2019, was not specified on the document.

ABN AMRO Bank is also claiming for interest spread losses of $35,100 and attorney fees of 800,000 yuan ($113,500), the notice said.

“The action of ABN AMRO could lead to domino effect. More foreign banks are considering taking action against Fangyuan now,” an industry source said.

According to a regulatory filing to the Shanghai Stock Exchange in August 2019, Dongying Fangyuan has an outstanding loan of $8.7 million (equivalent to about 60 million yuan) with ABN AMRO due in October 2021.

One $430 million syndicated loan – led by ABN AMRO and seven other banks in April 2019 – was tied to Fangyuan’s copper cathode offtake contract with Trafigura, Fastmarkets understands.

The industry, therefore, has been keeping a close eye on whether the Fangyuan smelting furnace is still hot and running because continuing production of cathode could be critical to helping Fangyuan secure further financial resources, sources said.

Dongying Fangyuan, which produced 748,000 tonnes of copper cathode in 2018, is currently running at limited capacity, sources close to the company told Fastmarkets.

The Shandong-based smelter, which was once China’s fourth-largest copper maker, had difficulties opening letters of credit (LCs) over 2019 in the midst of a liquidity crunch.

This issue had been a prime focus in the industry at the start of the year prior to the Covid-19 virus outbreak, which resultingly shifted market focus to disruptions to mines and logistics amid lockdown restrictions.

What to read next
The publication of Fastmarkets’ Shanghai copper premiums on Monday December 23 were delayed because of a reporter error. Fastmarkets’ pricing database has been updated.
Fastmarkets proposes to amend the frequency of the publication of several US base metal price assessments to a monthly basis, including MB-PB-0006 lead 99.97% ingot premium, ddp Midwest US; MB-SN-0036 tin 99.85% premium, in-whs Baltimore; MB-SN-0011 tin 99.85% premium, ddp Midwest US; MB-NI-0240 nickel 4x4 cathode premium, delivered Midwest US and MB-NI-0241 nickel briquette premium, delivered Midwest US.
The news that President-elect Donald Trump is considering additional tariffs on goods from China as well as on all products from US trading partners Canada and Mexico has spurred alarm in the US aluminium market at a time that is usually known to be calm.
Unlike most other commodities, cobalt is primarily a by-product – with 60% derived from copper and 38% from nickel – so how will changes in those markets change the picture for cobalt in the coming months following a year of price weakness and oversupply in 2024?
Copper recycling will become increasingly critical as the world transitions to cleaner energy systems, the International Energy Agency (IEA) said in a special report published early this week.
Fastmarkets proposes to lower the frequency of its assessments for MB-AL-0389 aluminium low-carbon differential P1020A, US Midwest and MB-AL-0390 aluminium low-carbon differential value-added product US Midwest. Fastmarkets also proposes to extend the timing window of these same assessments to include any transaction data concluded within up to 18 months.