LME halts plan to cut metals queues after court ruling

April 9, 2014 Leave a comment

March 27, 2014 11:41 am

LME halts plan to cut metals queues after court ruling

By Xan Rice

The London Metal Exchange has been forced to halt plans to reduce queues at its global warehouse network after a UK High Court judge ruled that its industry consultation was “unfair and unlawful”.

The case was brought by Rusal, the world’s largest aluminium producer, which argued that the rules due to take effect on April 1 would cause the metal price to fall and cost it tens of millions of pounds.

The regulations aimed to cut LME warehouse queues to 50 days after consumers complained that logjams to load out metal had artificially increased the price of aluminium, used in everything from beverage cans to automobile bodies.

Rusal sought a judicial review on three grounds: procedural unfairness, failure to undertake a sufficient inquiry and a breach of its human rights.

The judge said: “I have found the LME’s consultation to have been unfair and unlawful on the first two grounds advanced by Rusal.” And then he added that the third ground was “plainly arguable”. He set aside the LME decision to implement the new rules.

Oleg Deripaska, chief executive of Rusal, said: “We welcome this decision by the High Court and look forward to working closely with the LME, and indeed all key stakeholders, to ensure that the revised consultation period and subsequent rule changes serve to increase the integrity of price discovery and transparency across the market, which we believe are the key issues continuing to face the sector.”

In a statement the LME said it was disappointed with the decision.

“We continue to believe that Rusal’s complaint was without merit in its entirety and are currently taking legal advice with regard to our options, including appeal or re-consultation. Accordingly, the implementation of the linked load-in, load-out rule change will not take place on April 1 2014 as previously scheduled,” it said.

 

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