A major independent warehouser has extended its network further with a purchase in South Africa, an informed industry source told Reuters, at a time when delivery and storage is one of the hottest issues for the metals market.

Dutch warehousing and logistics firm C. Steinweg has bought South Africa-based Nomad Freight, a private warehousing and forwarding company, the source said.

Big trading companies and banks have been buying warehousing firms in a trend criticised by some metals traders, who fear conflicts of interests despite so-called "Chinese walls" that these companies implement as safeguards.

Banks and trading houses have used the metal and its storage as a financial tool to boost profits; storing metal generates tens of millions of dollars in revenues.

At the same time, London Metal Exchange (LME) regulations allow warehouses to release only a fraction of their inventories per day, leading to long delays in metal delivery.

Steinweg is the only major warehousing and logistics firm that is registered with the LME and remains independent. It told Reuters in March it was planning to stay that way.

Its latest purchase follows its acquistion of Dutch metal, stevedoring and warehousing company J Oosterom & Zoon earlier this month.

In a letter seen by Reuters, sent by Steinweg and Nomad to their customers the South African company said it was "a good time to join forces and team up" with Steinweg, which has a vast global warehousing and logistics network in 32 countries.

The purchase is Steinweg's first in southern Africa.

"Africa is a developing continent for resources, and Steinweg wanted to enter via an established market where cargo flows are already in existence," the industry source said. "That was the logic behind the purchase."

Nomad has a big interest in a warehouse operation in the South African port city of Durban, according to its website.

It also does export and import cargo forwarding, customs clearing and trucking services to and from resources-rich Zimbabwe, Zambia, the Democratic Republic of Congo and Malawi.

The LME, the world's biggest marketplace for industrial metals such as copper and aluminium, oversees a global network of privately owned warehouses where such metals are stored, partly for potential delivery against its contracts.

JP Morgan bought warehouse firm Henry Bath last February, after Goldman Sachs bought U.S.-based Metro. Traders Trafigura, Noble Group and Glencore have all taken charge of their own warehousing units.

Barclays Capital became the latest to move into metals storage, when it bought a stake in UK-based Erus Metals Ltd. (Reuters)