Rusal launches legal action against LME warehouse rules
By Eric Onstad and Polina Devitt
LONDON/MOSCOW (Reuters) - The world's biggest aluminum producer Rusal (0486.HK: Quote) has begun legal action aimed at having the London Metal Exchange (LME) overturn planned reforms to its warehousing policy, worried about further falls in the price of its metal.
The judicial review sought by the loss-making Russian company follows U.S. lawsuits against the LME alleging the exchange, two of Wall Street's biggest banks and big commodity merchants conspired to raise the price of aluminum.
The oldest and largest marketplace for industrial metals, the LME is caught between producers such as Rusal who fear rule changes could lower aluminum prices, deepening their losses, and industrial users who have long complained that prices have been propped up artificially.
Rusal said it filed a UK judicial review on Monday, demanding the scrapping of the LME's changes.
The LME unveiled the planned changes last month in response to complaints about queues of more than a year and large surcharges to withdraw metal from its warehouses.
"LME management considers that the grounds of Rusal's complaint are without merit, and will defend any judicial review proceedings vigorously," said the exchange, which is owned by Hong Kong Exchanges and Clearing Ltd (0388.HK: Quote).
"Implementation of the proposed changes to the warehousing policy will proceed as announced."
Rusal is not requesting financial compensation from the LME in its legal action, a source close to Rusal said. Continued...