JPMorgan Chase thought it had more than a million dollars worth of nickel when, in reality, it just had a lot of rocks (Picture: Getty Images/iStockphoto)

JPMorgan Chase & Co bought 54 metric tons (54,000kg) of nickel before realising they were actually just bags of stone.

The London Metal Exchange announced last week that it had cancelled $1,300,000 worth of nickel contracts after discovering ‘irregularities’ at a warehouse.

These ‘irregularities’ were how several shipments of nickel weren’t actually the silvery-white metal at all – they were lumps of rocks, per reports.

Now it turns out that JPMorgan, one of the biggest banks in the US, was the unlucky owner of sacks upon sacks of stones.

Insiders claimed that the bank bought the batch several years ago when they were already stored inside a warehouse in the Dutch port city of Rotterdam.

An operator weighed the hefty bags of rocks thinking they were nickel, sources told Bloomberg.

The operator of the Rotterdam warehouse says it is inspecting all its facilities after the mishap (Picture: BSR Agency)

The LME, one of the world’s top commodity exchanges, said last Friday that the fraud was ‘evident, from among other things, by the weight of the bags’.

Bloomberg noted that goods arriving in an LME-approved storage unit (which the exchange doesn’t actually own) are often trusted by buyers as legitimate.

JPMorgan likely had no idea the bags of nickel weren’t, well, nickel at all when the bank purchased them. The bank would have likely received all the necessary certifications to ensure the metal’s integrity.

Usually, further checks on the stored materials are handled by the LME or warehouse operators.

The Dutch warehouse is owned and operated by logistic firm Access World, owned by Swiss miners Glencore PLC.

Access World will likely foot the bill, given that it is the duty of the warehouse operator to protect the stores of metal.

An Access World spokesperson said: ‘Access World confirms it is currently undertaking inspections of warranted bags of nickel briquettes at all locations and will engage external surveyors to assist.

JPMorgan Chase & Co reportedly bought the shipments several years ago (Picture: Bloomberg via Getty Images)

‘In the meantime based on internal stock checks all information indicates that the underlying issue which led to the suspension of the 9 warrants referenced in LME notice 23/044 is an isolated case and specific to one warehouse in Rotterdam.’

LME contracts are seen in the metal trading world as the gold standard, Bloomberg added.

JPMorgan’s bags were registered as being deliverable against LME contracts in early 2022 before the exchange invalidated them.

If they had gone through, the shipments of nickel would have amounted to 0.14% of nickel inventories in LME warehouses.

JPMorgan Chase declined to comment.

Nickel has long been a hot commodity. It’s used in steel, electric vehicle batteries, boat propellor shafts, turbine blades, electric guitar strings as well as the US five-cent piece.

This mishap certainly didn’t crater the metal markets but did amount to yet another blow against LME, owned by Hong Kong Exchanges and Clearing.

The metal market has been uneasy for the last year due to the Russia-Ukraine war (Picture: Getty Images Europe / BSR Agency)

The metal market has been topsy-turvy since Vladimir Putin launched his now year-long war against Ukraine, given how Russia supplies 10% of nickel.

But the LME controversially paused nickel trading for a week last March after prices swelled to $100,000 a ton.

‘The current events are unprecedented,’ the exchange said at the time.

Some trading firms that had their nickel trades cancelled are now suing the LME to cover the losses.

The LME, however, says it acted to secure a fair and orderly market in the interests of the market as a whole’.

Trading in nickel remains frozen in Asia and was set to resume yesterday, but the discovery of the bags of stones forced LME to postpone it to next week.

Metro.co.uk contacted the London Metal Exchange for comment.

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We don’t think they’ll get the nickel back.