Publication: Monitor Volume: 4 Issue: 123

In a challenge to the London-based commodity trading company Trans-World Group (TWG), Kazakhstan Mineral Resources Corporation (KMRC) has announced that it intends to finance the construction of Kazakhstan’s first aluminum smelter. TWG dismissed the news as “nonsense.” (Reuters, June 19) As the former partner of the Kazakhstani offshore company, TWG last year spent more than US$1 million on a feasibility study for the smelter. (Aluminum Today, August 1, 1997)

TWG, which has invested millions of dollars in three northern Kazakhstani metals plans, suspended its investment in January after what it claimed was the government’s imposition of new management at the firms. According to TWG, ownership rights at the aluminum factory had become “confused” because TWG’s legal rights had come into conflict with KMRC’s real influence “on the ground.” In contrast, the local KMRC partners claimed that their shareholder rights had not been recognized by the trading house and that the level of investment TWG had promised in Kazakhstan, including the construction of the aluminum smelter, had not materialized. (Metal Bulletin, January 12)

After suspending its investment, TWG won an arrest order in the Netherlands on January 20 prohibiting warehouses from releasing ferrous alloys of Kazakhstani origin shipped after January 1. The dispute attracted international attention as TWG reportedly discouraged traders in Europe and the USA from accepting Kazakhstani commodities. (Metal Bulletin, January 26) The injunction preventing Kazakhstani parties from marketing or selling aluminum, iron ore and ferrous alloys was, however, stopped on March 6. The judge claimed that TWG had withheld some evidence. TWG argued that the judge had opposed TWG’s approaching the court on an ex parte basis, which had required TWG to argue both sides of the case.(Metal Bulletin, March 19)

TWG has now begun proceedings on an inter parte basis, in which both sides would participate, inviting KMRC to attend international arbitration proceedings in Paris. Meanwhile, KMRC has filed a lawsuit in Kazakhstan’s Supreme Court to define TWG’s shares in the aluminum plant. Further, KMRC has stated that it has already reached an agreement with several Western banks to finance the aluminum smelter, which is destined to produce 215,000 tons of aluminum a year.–SC

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