Japanese conglomerate Mitsubishi Corporation has announced plans to close its Chinese metal trading business after one of its traders caused a significant financial loss due to suspected fraud. The company will cease purchasing and selling refined metals and mineral resources in the Chinese spot market, as well as discontinue related services for local businesses, sources familiar with the matter revealed. However, Mitsubishi’s operations involving imports and exports for Chinese clients, managed from outside the country, will remain unaffected.
The loss, totaling ¥13.8 billion (approximately $92 million at current exchange rates), was linked to a Shanghai-based trader employed by Mitsubishi, who was dismissed following an internal investigation. Mitsubishi confirmed the fraud in December, after initial reports.
In a statement released, Mitsubishi confirmed that it would halt all new domestic transactions in China. While the company will continue to export goods to and from China through other trading units, it will no longer engage in new deals within the country’s domestic market.
Mitsubishi attributed the decision to both market conditions and the copper fraud, estimating the financial impact could reach “several hundred million yen.” A representative emphasized that the company’s actions were also in response to changes in the market environment.
The scandal, which marks the latest in a series of fraud cases impacting large commodity trading firms, has shaken Mitsubishi and its senior leadership, prompting the company to adopt a more cautious stance toward its investments in the increasingly uncertain Chinese market.
Mitsubishi Corporation RtM China Ltd., the company’s Shanghai-based trading unit, began informing clients of its decision to shut down operations. The unit is in the process of unwinding existing deals and will transfer any foreign trade contracts to other Mitsubishi offices once the matter is resolved.
A pioneer in foreign trade within China, Mitsubishi has been active in the country for about 30 years, primarily supplying imported copper concentrates to Chinese smelters and trading metals like aluminum to the world’s largest metal consumer. The company’s operations in China included sourcing metals from smelters and traders to supply local fabricators—a business primarily managed by rogue trader Gong Huayong.
Gong, a Chinese national and former trading manager at Mitsubishi RtM China, allegedly made unauthorized transactions with local companies, including some with familial ties, allowing deferred payments for copper concentrate and refined copper. These dealings were reportedly outside the approval of Mitsubishi.
While the fraud represents a significant compliance and risk management failure, Mitsubishi, one of Japan’s largest trading firms, is expected to maintain overall financial stability. The company anticipates a full-year profit of ¥950 billion, despite the setback.
This is not the first time Mitsubishi has made dramatic moves to address a crisis. In 2019, the company shut down its Singapore-based oil trading unit after a rogue trader caused over $300 million in losses. The trader, who claimed to have acted on management’s orders, argued that the losses were due to the “premature” settlement of derivatives positions.
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