The aluminum caper

Michael Raffety

April 3, 2017

In 2015 someone flew over central Mexico and discovered a huge cache of aluminum stacked up and fenced in. The Mexico stash represented 6 percent of global inventories. After the stockpile was brought to light in the Wall Street Journal it was moved to Vietnam –- about 1.7 million tons has been stored there since 2015. It is valued at $5 billion.

The $5 billion aluminum cache belongs to Chinese aluminum magnate Liu Zhongtian, age 52. He is chairman of what the Wall Street Journal describes as an aluminum “behemoth” -– China Zhongwang Holdings Ltd.

To get around the limit of taking no more than $50,000 out of the country annually Liu has used different companies, including one run by his son to shift boatloads of aluminum out of the country.

In a Dec. 29, 2016 Wall Street Journal article by Scott Patterson, it was revealed that Liu’s real motivation is to see the aluminum stockpiles as his retirement plan. He already spent 650,000 Euros to buy citizenship from the Mediterranean island of Malta, a member of the European Common Market. Liu’s real plan is to retire in Switzerland. This was uncovered in some emails. Of course, Liu denies all this and denies he knows the law firm working on his retirement plan.

Trying to import some of his vast horde of aluminum to the U.S. from Mexico or Vietnam is a different matter. The Commerce Department found the company received illegal Chinese subsidies and was “dumping” the aluminum below market prices. That puts it in the category of a 374 percent tariff.

Chinese aluminum production in 2015 added up to 55 percent of global output, up from 24 percent a decade earlier. U.S aluminum output accounted for 2.7 percent from five aluminum smelters operating at the end of 2016, down from 23 smelters in 2000.

Just before the inauguration of Donald Trump the U.S. government seized a “vast aluminum trove,” according to the headline in the Jan. 14 Wall Street Journal. The value of the seized aluminum was $25 million. The aluminum belonged to a company founded by Liu’s son and now run by one of Liu’s “close business associates.”

Liu’s spokeswoman denied Zhongwang Holdings Ltd. had any connection to the company.

The Vietnam horde by this time amounted to 14 percent of global inventories, shipping records show.

The seized aluminum, in shipping containers, was actually aluminum pallets, something airline shippers use to reduce weight. And others use the aluminum pallets to hold heavy weight. The pallets are actually exempt from the anti-dumping law. Pallets are shaped aluminum welded together. Homeland Security released 164 containers but retained 552.

The aluminum pallets were shipped from Vietnam.

The seized shipping containers remain so, as far as I can determine. Also left hanging is Zhongwang Holdings Ltd..’s $3.5 billion bid to acquire an American aluminum company. President Obama’s Treasury secretary was set to do a review of this acquisition as detrimental to national security. Both the seized containers and the corporate acquisition are left hanging by the transition and Senate Democrats’ slow walking every Trump nominee.

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