U.S. Justice Dept says looking into metals warehousing

Friday, 15 Nov 2013 | 1:14 PM ET

WASHINGTON, Nov 15 (Reuters) - A top U.S. Justice Department official said on Friday the agency was "looking at" allegations that warehousing firms have made some metals more expensive by restricting their flow out of storage facilities, sometimes for months.

At the heart of the issue are several companies with warehouses, including Glencore Xstrata's Pacorini, Trafigura's NEMS and Goldman Sachs' Metro. The companies have found a lucrative business in building up big stocks of metals, charging rent for storage and delivering the metal out of storage at a limited rate.

Trafigura, Goldman and Glencore officials all had no comment.

In July, MillerCoors, the second largest brewer in the United States, raised the issue at a hearing of the U.S. Senate Banking Committee, saying high physical prices have cost U.S. consumers an extra $3 billion a year.

Bill Baer, the Justice Department's assistant attorney general for antitrust, was asked at a congressional hearing on Friday if his agency was pursuing the issue.

"I can't comment on any details. This is a matter we are looking at," he told the U.S. House Judiciary Committee's regulation and antitrust subcommittee.

The U.S. Commodity Futures Trading Commission has sent subpoenas regarding the situation, a source with direct knowledge of the matter told Reuters in August.

A different source had said that Justice Department officials had visited an unnamed U.S. warehousing firm and asked about how the business was run, Reuters reported in August.

The Beer Institute, which represents the $250 billion beer industry and over 2,800 breweries, which use a lot of aluminum in cans, has met with the Justice Department and urged it to take action, a source familiar with the meeting said in July.

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