London Metal Exchange faces legal action over trading in ‘dirty metals’

The London Metal Exchange (LME) is set to defend itself after legal action was filed in the English High Court by eco groups over it “trading in dirty metals”.

Global Legal Action Network (GLAN), along with the London Mining Network, are arguing that by enabling the global sale of ‘dirty metals’, LME is breaching UK anti-money laundering legislation.

The case concerns the Grasberg Mine mine in West Papua, Indonesia. The lawsuit argues that the copper derived from this mine is “criminal property” as it is produced in circumstances that would breach UK criminal law if they were to occur in the UK.

The claimant parties state that the “legal action will have implications for other companies whose mining operations are linked to environmental crimes overseas accessing the LME”.

The eco claimants stated that West Papua communities are suffering the effects of mining waste pollution from the Grasberg mine being dumped into the water sources. They outlined that over 200,000 tonnes of toxic mining waste, known as ‘tailings’ are thrown into local rivers every day.

They added that the environmental harms in West Papua highlighted in this case are symptomatic of a deeper problem across the world.

The claimants added, if successful, GLAN and LMN’s legal action might force companies to revisit too the way they produce metals the other countries.

GLAN lawyer Stéphanie Caligara said, “This case is an opportunity for the LME and metal producers to align with consumer expectations and with standards that are key to ensuring a sustainable green transition. As the global hub for metal trading, the LME sets the standards for the metal industry.”

“It has both the duty and the power to ensure that the metals it offers for sale on its Exchange are not the products of environmental crime. This will ripple through the entire mining industry which will have to drastically improve its practices to the benefit of the environment and local communities,” she added.

GLAN Director, Gearóid Ó Cuinn added: “Never before has a legal action of this sort been taken in the UK. It highlights to exchanges and other economic service providers that they can no longer continue with business as usual. Banks are especially implicated in the functioning of exchanges like the LME and are now on notice that they too may be in breach of proceeds of crime laws.”

Back in November, a court ruled in favour of the LME after it faced legal action by Elliott Investment Management for suspending the nickel market in March 2022. The Wall Street hedge fund launched its claim against the Exchange for £365m back in June 2022.

Commenting on the lawsuit, a spokesperson for LME said: “the LME believes that the claim filed by the London Mining Network and the Global Legal Action Network is misconceived and intends to resist that claim.”

“Over and above its existing regulatory requirements, the LME’s brand listing requirements reflect the international consensus on best practice in respect of ethical and sustainability issues. For example, the LME has undertaken significant work in embedding the globally accepted OECD guidance for guarding against conflict finance and other abuses and is in the process of suspending a number of brands who have not been able to demonstrate compliance with the LME’s new rules.”

“The LME has undertaken extensive discussion with its market as to embedding further environmental requirements into its brand listing rules, but does not believe that global consensus has yet been reached on such requirements (beyond the ISO 14001 standard or equivalent, which the LME has also made mandatory for brands). The LME has therefore adopted a disclosure-based approach through LMEpassport, supporting the principle of consumer choice as to environmental credentials of metals brands,” they added.

The story was updated to include LME comments.