China's Qingdao Port Fraud Probe Prompts Citic to Secure Metal Stash

Citic Resources Holdings has said it may be affected by the probe into alleged fraud at Qingdao port in China.

An investigation was launched into world's seventh largest port amid suspicions that a company has used single metal cargoes multiple times in order to raise finance.

Shares in Citic Resources plunged by 8% after its leadership confirmed that it could be affected by the investigation.

"At present the status of the investigation is unknown to the group," CITIC chairman Kwok Peter Viem said in a note to the Hong Kong stock exchange.

"Until the status of the investigation is clarified, the company is not able to accurately assess its impact on the group's alumina and copper stored at Qingdao port or on the group itself," Kwok said.

The company said it had sought a court order to secure its metal assets.

CITIC Resources is the commodities trading unit of China's biggest state enterprises, CITIC Group Corp.

It is the latest company to warn of possible losses relating to the port, after Standard Bank and GKE Corp issued similar statements.

Standard Chartered is reviewing financing to a number of Chinese metals companies and Citi Group has launched a probe into loans provided to trading houses, secured against copper and aluminium stored at Chinese ports.

Meanwhile, some Western banks are concerned over the possibility of a fraud case at another Chinese port, according to the Wall St Journal.

Penglai port in Shandong province is the second port in question, the newspaper reported.

Qingdao port was floated on the Hong Kong stock exchange in June, to a muted response from investors.