Huge aluminium stockpile discovered in Mexican desert: U.S. sees a Chinese connection

As reported by the Wall Street Journal, two years ago, a California aluminium executive commissioned a pilot to fly over the Mexican town of San José Iturbide, at the foot of the Sierra Gorda mountains, and snap aerial photos of a remote desert factory.

He made a startling discovery. Nearly one million metric tons of aluminium sat neatly stacked behind a fortress of barbed-wire fences. The stockpile, worth some $2 billion and representing roughly 6% of the world’s total inventory—enough to churn out 2.2 million Ford F-150s or 77 billion beer cans—quickly became an obsession for the U.S. aluminium industry.

Now it is a new source of tension in U.S.-Chinese trade relations. U.S. executives contend that the mysterious cache was part of a brazen scheme by one of China’s richest men to game the global trade system.

Aluminium-industry representative and President of Aluminium Extruders Council, a U.S. trade group, Jeff Henderson says he is convinced that China Zhongwang Holdings Ltd., a Chinese aluminium major, tried to evade U.S. tariffs by routing aluminium through Mexico to disguise its origins, a tactic known as transhipping.

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“My Moby-Dick has been Zhongwang,” says Mr. Henderson.

Mr. Liu, a member of China’s ruling Communist Party, denies any connection to the Mexican aluminium or transhipping. “These things have nothing to do with me,” he said in a June interview.  He said he wouldn’t know how to establish a business in Mexico.

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