NEW YORK The
London Metal Exchange warehouse systems lengthy queues
and high premiums paid for metal is costing aluminum buyers
billions of dollars a year, according to one large
The system has cost
MillerCoors LLC "tens of millions of dollars in excess premiums
over the last several years, with no end in sight," said Tim
Weiner, global risk manager of commodities and metals for the
Chicago-based brewer. "My company and others estimate that last
year alone the LME warehouse rules have imposed an additional
$3 billion expense on companies that purchase aluminum."
In a statement before
a July 23 hearing by a Senate Banking, Housing and Urban
Affairs subcommittee, Weiner blamed U.S. bank holding companies
for creating a bottleneck limiting the supply of aluminum.
The hearing to
consider whether banks should control power plants, warehouses
and oil refineries comes as U.S. consumers and politicians
debate the commercial and physical commodity activities of U.S.
Weiner said the
aluminum his company purchases is being held in warehouses
controlled and owned by U.S. bank holding companies "who are
members of the LME and set the rules for their own
According to Weiner,
the brewer has taken its warehousing concerns to the LME and
made a number of proposals to amend the rules, but its
suggestionswhich included a daily load-out rate for each
warehouse at each site, and a limit on rental charges after
metal warrants are canceledwere dismissed.
U.K. and U.S.
regulators "have indicated they are uncertain whether they have
the regulatory authority necessary" to enforce changes on the
LME warehousing system, Weiner said.