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Trafigura taken to court on allegations of causing Nyrstar's collapse

Trafigura Group Pte. Ltd. is accused by Nyrstar NV shareholders of using its influence to sway the zinc refiner's board into making lopsided deals that drained cash from Nyrstar and subsequently led to its collapse, Bloomberg News reported Sept. 9, citing a lawsuit filed in Belgium.

A lawyer who claims to represent about 100 Nyrstar investors, said the documents related to the case — including contracts between Nyrstar and Trafigura — confirmed its main suspicion that Trafigura was "in a position to exploit or make an abuse of its economic control."

The group of Nyrstar shareholders raised issues in the company offering preferential rates at a steep discount to Trafigura. An analysis by Kris Vansanten, a shareholder and founder of Quanteus Group, said Nyrstar took in processing fees that were subpar against prevailing industry rates, which placed operating margins under strain.

"A smelter every year fights for every dollar he can get per ton of zinc. Reducing that significantly with Trafigura is at the least very, very strange," said Julien De Wilde, a former Nyrstar chairman, in the Bloomberg News report.

Further, a person familiar with Nyrstar's prior commercial arrangements said Trafigura's contract, which allowed it to purchase finished metal at a substantial markdown against spot-market rates, placed the trader at a distinct advantage.

Through its counsel, Nyrstar defended itself against the allegations by shareholders, saying the claims are "nothing new and entirely incorrect," adding that the statements made "a lot of material errors and simple insinuations." Trafigura, however, declined to comment in the newswire's report.

Trafigura was the largest shareholder in Nyrstar, prior to a debt restructuring that allowed the trader to take over the zinc refiner.