The London Metal Exchange (LME) is gearing up for a legal battle as it seeks to appeal a court ruling that put a stop to its efforts to reduce backlogs at its warehouse network. The LME, considered the world’s top market for industrial metals, was granted permission to appeal against a decision that favored Russian aluminium producer Rusal.
The court ruling in March blocked the LME’s plans to implement new rules aimed at cutting down on the long waiting times for industrial companies to access metal stored in LME-approved warehouses. Rusal had challenged the reform, arguing that consultations leading up to the decision were unfair and unlawful.
Despite the setback, the LME expressed optimism after being granted leave to appeal, noting the need to find a quick solution for the market. The court of appeal judge acknowledged the grounds for appeal and questioned the original ruling’s impact on public bodies conducting consultations on complex issues.
Rusal, which had raised concerns that the reforms could further depress aluminium prices, expressed disappointment over the LME’s decision to pursue legal action. The Russian group remains confident that the original ruling will be upheld and criticized the LME for not addressing the deficiencies pointed out in the initial judgment.
The LME, overseen by Hong Kong Exchanges and Clearing Ltd, plays a crucial role in facilitating the delivery of quality-assured metal supplies to buyers on its futures market. The reforms were intended to address the long queues for metal withdrawal, a practice that has kept physical aluminium costs high despite ample supply. The LME’s latest data revealed extended wait times at warehouses owned by Glencore and Goldman Sachs, highlighting the urgency of resolving the backlog issue.
