Jignesh Shah, aide Shreekant Javalgekar held in Rs 5,600-crore NSEL scam

 Jignesh Shah, founder of Financial Technologies (India) Ltd, was today arrested by the Economic Offences Wing (EOW) of Mumbai police for his alleged involvement in the Rs 5600-crore National Spot Exchange Limited (NSEL) scam.

Along with Shah, Shrikant Javalgekar, former CEO of Multi Commodity Exchange of India (MCX), was arrested. His arrest was because of his alleged links with the Indian Bullion Market Association (IBMA), which is a wholly owned subsidiary of NSEL.

Both have been arrested under the Maharashtra Protection of Interest of Depositors Act and they would be held in police custody.

The two high-profile arrests mark an important point in the NSEL payment crisis.

Troubles for the exchange began after it was asked in July last year to suspend spot trade in most of its contracts because of suspected trading violations. It could not settle the outstanding trades, sparking an investigation by the police and regulators. There were 24 members who defaulted payment to about 13,000 investors.

After the crisis came to light, the first high-profile arrest was that of Anjani Sinha, former managing director & CEO of NSEL, by the EOW in October last year. With Shah’s arrest, the total number of arrests in the scam has gone up to 11.

Rajvardhan Sinha, additional commissioner of police, EOW, told reporters here today that both Shah and Javalgekar did not give satisfactory answers during interrogations and that the arrests were necessary to take the investigation to its logical conclusion. “They were not co-operating with us during the investigation and they were evasive. We realised that their custody is important to help in better investigation of the case,’’ he added.

Sinha said the EoW team during investigations found both Shah and Javalgekar were involved in criminal conspiracy. He pointed out that the volume of trades at NSEL were linked with profits of FTIL and that higher trades at the exchange, meant more profits for the parent company. He added that the next course of action by the EOW would be to investigate the role of some of the brokers in the entire crisis.

Sinha said some of the brokerages indulged in malpractices. This included the use of client accounts for unauthorised trades.

The board of FTIL will meet tomorrow to discuss the arrest of its founder and chart a future course of action.

FTIL has been declared unfit by the Forward Markets Commission (FMC) to run an exchange and it has been ordered to pare its stake in MCX to 2 per cent from 26 per cent currently.

Shah’s arrest came on a day FTIL moved the Securities Appellate Tribunal (SAT), challenging a ruling by the Securities and Exchange Board of India (Sebi) which said it was not “fit and proper” to have a stake in any stock exchange.

FTIL will have to divest its entire stake to meet tighter commodity exchange ownership guidelines issued yesterday by the FMC.

On March 19, the market regulator had directed FTIL to divest existing holdings in MCX-SX and four other entities that included National Stock Exchange, Delhi Stock Exchange (DSE), Vadodara Stock Exchange (VSE) and MCX-SX Clearing Corporation (MCX-SX CCL).

Indian Rupee (USD-INR) May 2014

Should Not Close Below 59.95 .

Else Next Target 59.11. Three Consecutive Closes Could Take Currency Further Down To 57.80. 

Newmont May Start Cutting Indonesian Copper Output from June

Newmont Mining Corp will start cutting back production at its Batu Hijau copper and gold mine in Indonesia from around June 1, the U.S. miner said in a statement on Wednesday, if talks with the government remain unresolved over export taxes.

Indonesia in January levied an escalating tax on copper concentrate exports, but both Newmont and rival copper miner Freeport-McMoRan Copper & Gold Inc - who together account for 97 percent of Indonesia's copper output - said the rule conflicts with contracts they signed with Indonesia that exempt them from new taxes and duties.

"Batu Hijau's copper concentrate storage facilities will reach capacity in late May, requiring an orderly ramp down of operations," the firm said in its statement.

"Once the mine's copper concentrate storage is filled, PTNNT (PT Newmont Nusa Tenggara) will move to cease mining and milling."

Before the new export rules, Newmont forecast copper concentrate output for 2014 at 110,000-125,000 tonnes.

Newmont usually supplies around 30 percent of its Indonesian output to the country's only copper smelter, PT Smelting at Gresik.

Copper May be The Best among Base Metals in Near Term: Morgan Stanley

 Copper may be the base metal with the most near-term upside potential, said Morgan Stanley.

According to Morgan Stanley, the complex drifted lower throughout the (last) week on speculative liquidation, but copper held better, particularly at week's end.

"We think the market may be feeling more comfortable with respect to Chinese demand prospects in 2Q vs. 1Q. We think copper possesses the best near-term outlook, as supply appears tight at a time of seasonal demand strength," the firm added.

CMST Says Consortiums Stockpile Nickel in China

An official from China Material Storage and Transportation Co. (CMST) which runs the country’s largest warehouse for nickel said that consortiums are stockpiling the metal, National Business Daily reported today. 

The unnamed CMST official said at a seminar that stockpiling activities by those consortiums were the major reason behind surging nickel prices , the report said. Daily outbound delivery of nickel from its warehouse hit an all-time high of 12,000 tonnes in March, one fifth of the company’s inventory, the official said. 

Nickel prices are expected to continue consolidating at the current 120,000-130,000 yuan ($19,485-21,108) per tonne level, and may hit 180,000 yuan per tonne once breaking the upper band, he added.  

Pennsylvania Zinc Plant Ends Operations; More than 500 Jobs Affected

Horsehead Holding Corp. has announced closure of its Zinc facility in Monaca, Pennsylvania. The shutdown of Monaca plant is part of Horsehead's strategic transition to its newly built Mooresboro, North Carolina facility.

According to reports, the company's decision will affect over 500 full time and contract employees at the site. Around 40 staff is being retained to carry out the final closure procedures. The number of employees would be further down sized by end-May when the demolition activities are expected to begin.

The zinc oxide and high purity zinc metal refinery operation at the Monaca facility had ceased operation on December 23, 2013. Horsehead also had entered into an agreement with Shell Chemical LP towards demolition and other related activities at Shell's expense. As per newspaper reports, Shell plans to convert the site into a hydrocarbon cracking plant.

Horsehead Holding Corp. is the parent company of Horsehead Corporation, a leading U.S. producer of specialty zinc and zinc-based products and a leading recycler of electric arc furnace dust. Horsehead's products include zinc oxide (used in the agricultural, chemical, and pharmaceutical industries), zinc dust (used in corrosion-resistant coatings), and nickel-based metals (used as a feedstock to produce stainless and specialty steels).

China Sends Oil Rig To Disputed Waters

Over the weekend of May 3 and 4, China sent an oil rig into disputed waters of the South China Sea to begin oil exploration. The rig is near the Paracel Islands, inside the 200-mile exclusive economic zone of Vietnam, which angrily protested the decision. The Vietnamese government insists that the waters, as well as the oil and gas reserves held beneath, belong to Vietnam.

• VIETNAM CANNOT ACCEPT AND STRONGLY OPPOSES CHINA RIG PLACEMENT

Where boundaries are drawn in the South China Sea has long been a source of regional tension, but China has escalated the conflict by moving to drill the first well inside disputed territory. China said the oil rig would be operating from now until August 15.

Some observers see the move as a careful calculation by Beijing, which believes Vietnam won’t be willing to risk war over Chinese drilling. “It's going to be one more of these small, incremental steps that individually won't lead to conflict, but collectively, over time, gradually will change the status quo,” said Admiral Mike McDevitt U.S. Navy (Ret.), according to Foreign Policy.

For its part, Vietnam is demanding that China cease drilling operations. “All foreign activities in Vietnam's seas without Vietnam's permission are illegal and invalid,” Vietnam’s Foreign Ministry said in a statement. “Vietnam resolutely protests them.”

The move may also be a response to U.S. President Barack Obama’s recent trip to Southeast Asia, which included a deal with the Philippines to allow for a greater American troop presence in the region. The U.S. and the Philippines kicked off a two-week long military exercise on May 5.

The U.S. Energy Information Administration estimates that the South China Sea holds 11 billion barrels of oil and 190 trillion cubic feet of natural gas, most of which is located in disputed territory. China believes the oil and gas reserves could be much larger.

The question now becomes, after his recent Asia trip, is this another red line being crossed for President Obama?

Submitted by James Burgess via OilPrice.com