By Ese Erheriene
The U.K. Supreme Court said Thursday that Russia's United Co.
Rusal PLC can't appeal against reforms to metal storage rules,
ending a lengthy dispute with the London Metal Exchange.
Rusal, the world's largest aluminum producer by volume, had
challenged changes to LME rules on how metal is loaded into and out
of warehouses. It had won a ruling in its favor in March, but lost
on appeal in October.
The Supreme Court was Rusal's last avenue of appeal. In its
judgment Thursday, the Supreme Court said Rusal did "not raise an
arguable point of law."
The storage of large amounts of aluminum by warehouses had
caused queues to build up. Some customers waited up to two years to
receive their deliveries of the metal, and prices rose.
To address these issues, the LME proposed changes to its storage
rules that forced warehouses with logjams of more than 50 days to
load out more metal than they took in, until waiting times
fell.
Rusal objected on the grounds that the metal exchange had harmed
its economic interests by not properly consulting with the
industry.
The new warehousing rules are intended to take effect on Feb. 1,
2015.
"The implementation of LILO [load-in, load-out rule] will take
place as planned and the remaining elements of our warehouse
reforms package will also be addressed," said the LME.
Rusal's spokeswoman, Vera Kurochkina, said the company was
"disappointed" by Thursday's court ruling. However, she said the
LME's new rules were "likely to have little effect on queues or
premiums" because the market was no longer in surplus, but instead
had a supply deficit after production cuts.
"Accordingly, market conditions today are fundamentally
different than the conditions in existence at the time the rule
change was first proposed," she added.
The LME, owned by Hong Kong Exchanges & Clearing Ltd., is
the biggest global financial market for industrial metals, and it
operates the physical transfer of metals through a network of
LME-registered warehouses around the globe.
Metal buyers had complained that the sums they had to pay to get
metal without waiting in line at the warehouses had reached record
highs. Some filed lawsuits in the U.S., complaining that financial
firms were essentially hoarding metal to drive up prices, although
the claims were dismissed by a U.S. District Court.
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