Louis Dreyfus Commodities BV agreed to buy majority control of GKE Metal Logistics Pte Ltd., emulating rivals including Goldman Sachs Group Inc. that expanded into warehousing of metals.
Louis Dreyfus will pay S$8 million ($6.3 million) for a 51 percent stake, Van der Horst Energy Ltd., GKE’s Singapore-based owner, said yesterday in a stock-exchange filing. The unit is approved by the London Metal Exchange to handle and store copper, aluminum, nickel, zinc, lead and tin in its five Singapore warehouses and also offers warehousing in Shanghai.
Banks and commodities traders are taking interests in warehousing companies to reduce the cost of storing metal. Goldman Sachs bought Metro International Trade Services LLC in 2010, while JPMorgan Chase & Co., Barclays Capital and Glencore International Plc also have acquired ownership of companies that operate metal-storage sites.
The LME, the world’s biggest marketplace for industrial metals, has more than 600 approved warehouses and compounds worldwide in 37 locations, according to its website. At least 30 companies are authorized to store LME metals. Depots are selected based on criteria such as access to highways and the ability to meet minimum daily delivery rates to clients, known as the load-out rate.
Louis Dreyfus is carrying out the transaction through LD Commodities Metals Asia Private Ltd., according to the filing. The raw-materials trader has origins going back to 1851, its website shows.