JPMorgan Chase kept Rs 10.7 crore worth of nickel in warehouse, turned out to be stones

JPMorgan Chase, one of the largest banks in the United States, made headlines recently for all the wrong reasons. The bank had purchased 54 metric tons (54,000kg) of what they believed to be nickel, only to later discover that the hefty bags were actually filled with rocks.

The London Metal Exchange (LME), one of the world's premier commodity exchanges, had cancelled $1.3 million (Rs 10.74 crore) worth of nickel contracts due to “irregularities” at a warehouse in the Dutch port city of Rotterdam. Upon investigation, it was revealed that the so-called “irregularities” were actually bags of stones, not nickel.

The mishap was not the fault of JPMorgan Chase, as they had purchased the batch several years ago when the bags were already stored in the warehouse. An operator had weighed the bags of rocks, mistaking them for nickel, according to a Bloomberg report. The bank was likely unaware that the bags of nickel were not genuine, as it would have received all the necessary certifications to ensure the metal’s authenticity. Usually, further checks on the stored materials are carried out by the LME or warehouse operators.

Access World, the logistics firm that owns and operates the Dutch warehouse, will likely bear the cost of the mistake since it is their responsibility to safeguard the metal stores. An Access World spokesperson said that they were currently conducting inspections of warranted bags of nickel briquettes at all locations and would engage external surveyors to assist.

The LME, which does not own the storage unit, is often trusted by buyers as legitimate. The cancellation of JPMorgan's bags of nickel was a blow to the LME, which is seen as the gold standard in metal trading. LME contracts are highly valued in the metal trading world.

Nickel has always been a hot commodity, as it is used in the production of electric vehicle batteries, steel, turbine blades, boat propeller shafts, and even guitar strings. This mishap did not have a significant impact on the metal markets but was a blow to the LME.