JPMorgan Chase thought it had $1.3 million worth of nickel stored in a warehouse. A closer examination revealed bags of stones.
The bank kept bags of stones in a Dutch warehouse thinking they were bags of nickel that would have been worth more than a million dollars.
The London Metal Exchange revealed a surprising mix-up last week at a warehouse in the Dutch port city of Rotterdam.
An operator for the warehouse weighed bags that were thought to contain 54 metric tons of nickel only to find they were filled with stones, according to The Wall Street Journal.
It appears that the unlucky owner of those bags is none other than JPMorgan Chase, the Journal said on Monday citing people familiar with the matter.
Had they contained nickel, the bags would have been worth $1.3 million at current prices, representing 0.14% of nickel inventories, Bloomberg reported. While that means the mix-up will have a relatively minor impact on metal markets, it does call into question the security of the LME's contracts. "In an industry riddled with scandals, the LME's contracts are viewed as unquestionably safe," Bloomberg said.
The LME first announced the mix-up last Friday but didn't disclose the owner of the supposed nickel bags or the warehouse where they were kept, according to The Wall Street Journal. However, people familiar with the matter said the warehouse was owned and operated by the logistics firm Access World, according to the Journal.
A spokesperson for Access World told Insider that "Access World confirms it is currently undertaking inspections of warranted bags of nickel briquettes at all locations and will engage external surveyors to assist. In the meantime based on internal stock checks all information indicates that the underlying issue which led to the suspension of the 9 warrants referenced in LME notice 23/044 is an isolated case and specific to one warehouse in Rotterdam."
It's likely that Access World is going to bear the burden — ie, the bill — for the mix-up rather than JPMorgan Chase, the Journal said, because it was the company's responsibility to protect the stores of metal in its facilities.
JPMorgan Chase reportedly bought the bags years ago and remains an active player in big metals, the Journal said.
JPMorgan Chase and the LME also did not immediately respond to Insider's request for a comment.