China’s CITIC Resources Holding Ltd said on Wednesday a court has been unable to secure more than 100,000 tonnes of alumina stored at Qingdao port, deepening fears that firms exposed to a metals financing scam at the port could face big losses. The Chinese port, the world’s seventh busiest, has been at the centre of a probe looking into whether a private metals trading firm, Decheng Mining, used multiple warehouse receipts for the same metal cargo to obtain financing. The alumina the Chinese commodities trader was unable to secure via a local court has a value of around $43 million based on current market prices. CITIC Resources said it would conduct its own investigation and was considering further legal action. Traders said there was a risk the metal could have been already claimed and removed before part of Qingdao Port was sealed off, adding that at least two trading houses had moved metal out as soon as news of the scandal broke. “Authorities will be able to trace which company claimed the metal but if those stocks have already been liquidated then there’s not much CITIC can do, especially if the other firm also had proper documentation,” said a Shanghai-based metals trader. The scandal has rattled global metals markets, reflecting market fears about business practices in China and worries that the probe could extend to other ports and prompt a crackdown on using metal as collateral for finance. So far no further cases have been unearthed. Panic over the scandal has meant that some metal cargoes held at China’s Qingdao Port have been shipped to more regulated London Metal Exchange warehouses, industry sources have said. The use of commodities as collateral to raise finance is common practice in China and is not illegal. But duplicating receipts to repeatedly mortgage the full value of an asset is fraud and could leave more than one creditor holding claims to the same collateral. “The company has been notified that in the enforcement of the sequestration orders obtained by the group, the Qingdao court has been unable to sequester about 123,446 MT (metric tonnes) of alumina which the group has stored at Qingdao port,” CITIC Resources said in a statement to the Hong Kong exchange. CITIC Resources said it had title to 223,270 tonnes of alumina and 7,486 tonnes of copper stored at the port pending payment by and delivery to buyers. COMPETING CLAIMS CITIC Resources is the commodities trading unit of China’s biggest and oldest state-owned financial conglomerate company, CITIC Group Corp. Singapore sovereign wealth fund Temasek Holdings also holds an 11.46 percent in the unit. Shares in CITIC Resources, which have lost about 5 percent since it said on June 10 that it could be affected by the alleged fraud, were trading up 1.6 percent by 0332 GMT. The firm said it did not have information on the status of an investigation by Qingdao authorities and was not yet able to accurately assess the impact of the alleged fraud. But firms exposed to the fraud could face competing claims. “If you’re prudent, you’ll be insured. If you’re not insured, you could find yourself carrying the can,” said a person at a global trading house based in Singapore. FALLOUT SPREADING In March, Goldman Sachs estimated commodity finance deals in China were worth as much as $160 billion, or about 31 percent of the country’s total short-term foreign exchange loans. While Western banks dominate metals financing in China, local banks may also be affected by the investigations into Decheng Mining. According to Chinese business daily Caixin, Decheng’s parent company, Dezheng Resources, and its subsidiaries had borrowed a total of 14.8 billion yuan ($2.38 billion) from Chinese banks. No one picked up phone calls to Dezheng’s office in Qingdao seeking comment. Global banks including Standard Bank Group and a part-owned unit of Louis Dreyfus Corp, Singapore-listed GKE Corp. have warned of potential losses from the scandal. Standard Chartered has said it is reviewing metals financing to a small number of companies in China and acknowledged there are issues in China around commodities, while Citigroup Inc said it was working with authorities, warehousing companies and clients to resolve the matter. HSBC Holdings said it was assessing transactions on a case-by-case basis.