Nearly five years after the Fanya Metal Exchange halted trading in 2015, the last of the stockpile of minor metals amassed by Fanya were finally auctioned off in early 2020. And, so, the book seemed closed on the story of the short-lived Chinese minor metal investment scheme.
But, here
we are one year later, and it is beginning to look like there will be more to this story.
On January 10, 2021, a lesser-known, publicly traded Chinese aluminum alloy company (Harbin Zhongfei New Technology Co. Ltd.) released a public statement advising that RMB 831 million (approximately USD 129 million) in company funds had been withdrawn by the company's Actual Controller*, Zhu Shihui, and transferred to companies that he is affiliated with.
One company that Mr. Zhu is affiliated with is Vital Materials Co. In fact, he is the Chairman and President of the Vital Materials, which is one of China's most powerful enterprises and a global player in the minor metals industry.
Founded in 1995, Vital Materials describes itself as "a high-tech company and global leader in R&D, production, sales and recycling of rare metals and high tech materials, devices, modules and systems."
Although the successful bidder for the majority of the Fanya stockpile was an unknown company registered in Kunming, China ("Kunming Rongke New Materials"), Vital Materials acknowledged shortly after the auction that it was behind the purchase of over US$ 600 million worth of bismuth, germanium, gallium, selenium and indium.
The exact details of all the transactions that Mr. Zhu made with the funds belonging to Harbin Zhongfei are not known, but a fairly clear description of the activities was made in the statement by Harbin Zhongfei New Technology. These were summarized in a Chinese-language article published on the website stcn.com. To read my rough translation of the article please click here (the translation is in .pdf form).
What jumps out is the timing of these transactions, which occurred over the past 12 months. It has hard not to draw a line between hundreds of million of dollars that Vital Materials committed to purchase minor metals and the report of significant illicit transactions between companies affiliated with Mr. Zhu.
---
Terence Bell, SMI Ltd.
*In China, “Actual Controller” (实际控制人) is an ill-defined legal term indicating a person that exercises control of a corporation directly or indirectly through equity interests, contract, trust or any other means. For more information, see: https://www.omm.com/resources/alerts-andpublications/alerts/actual-controlling-person-concept-under-prc-fdi-regime
Related Links:
Harbin Zhongfei New Technology Co. Ltd.
Comments