LME Fines Pac Global Services Spain £250,000 Over Warehouse Agreement Breaches

​The London Metal Exchange (LME) has imposed a financial penalty of £250,000 on Pac Global Services Spain S.A.U. (PGS) following a disciplinary investigation into multiple breaches of the exchange's Warehouse Agreement.

According to the LME, its Enforcement Committee instructed that disciplinary proceedings be brought against PGS after an investigation identified several operational and compliance shortcomings at facilities linked to the company's warehouse operations.

One of the key incidents occurred during a January 2023 site visit to Warehouse A, a storage shed within PGS's Rotterdam operation. Investigators found that three nickel Warrants had been intentionally loaded out of the warehouse and transferred to a non-LME-approved facility within the same delivery point, even though the metal continued to be listed as Cancelled Tonnage in LMEsword, the exchange's warehouse reporting system. The LME determined that this action breached clauses 3.2 and 6.3.2 of the Warehouse Agreement.

The investigation also identified operational deficiencies in the bagging, labeling, and storage of bagged nickel Warrants. In one instance, a nickel bag was labeled with the incorrect brand, which the exchange said violated Regulation 6.1(d) of the Special Contract Rules.

Additionally, the LME found a small number of damaged nickel bags that had been previously identified in an independent third-party audit conducted before the investigation. However, the issue was not addressed until the LME raised it during the probe. The exchange said the failure to promptly re-bag the damaged material constituted breaches of clauses 11.1 and 11.6 of the Warehouse Agreement.

Further shortcomings were identified in PGS's written procedures and staff training related to the storage, handling, and delivery of bagged nickel. The exchange said these deficiencies violated clauses 11.1 and 11.8 of the agreement.

PGS had also engaged an external agent to operate Warehouse A and conduct periodic inspections as required under clause 7.4.1. However, the LME found that written inspection records were not retained, breaching clause 7.4.2 of the agreement.

A separate issue emerged during the investigation in February 2025, when the LME discovered 62 copper Warrants stored in an open yard outside an LME-listed warehouse in Kaohsiung, Taiwan. The metal was moved inside an approved storage shed once the issue was identified. The exchange described storing warrant metal outside an approved shed as "an egregious breach" of the Warehouse Agreement, particularly clause 2.2.2(iii).

Before formal disciplinary proceedings were instituted, the LME and PGS reached a settlement agreement under which PGS agreed to pay the £250,000 penalty.

In determining the outcome, the LME said it considered the remedial measures taken by PGS to reduce the likelihood of similar incidents occurring in the future.