The London Metal Exchange (LME) plans to list Jeddah, a Saudi Arabian Red Sea port city, as a new delivery point for copper and zinc subject to consultation on a technical change to the LME's warehouse location framework, it said on Tuesday.
The warehouses, registered with the LME, the world's largest and oldest metals trading venue, are usually located in areas of net metals consumption or top transit hubs such as Rotterdam.
"Saudi Arabia is an increasingly important global metals hub and Jeddah fully meets with the operational and logistical criteria for new warehouse locations – such as being an important area of net consumption and having an effective transport network," Matthew Chamberlain, LME chief executive, said in a statement.
Saudi Arabia is planning an ambitious industrial development and logistics programme, part of its wider Vision 2030 reform plan, which aims to make the kingdom a major global player in the energy, mining, logistics and industry sectors.
"We look forward to a long future of cooperation with LME and to further developing our relationships with the international metals community," said Farooq Shaikh, chief executive at LogiPoint, which operates a network of logistics parks in Saudi Arabia.
The Saudi hub would service the Middle East, North and East Africa regions, he added.
The proposal is subject to a consultation among LME members, warehouse companies and their London agents, which will run until April 30, to amend a clause in the LME's policy on the approval of locations as delivery points related to warehouse insolvency.
The proposed amendment would clarify that some jurisdictions may require a court order to allow the withdrawal of metal in an event of a warehouse operator insolvency.
Subject to the proposal passing the consultation, Jeddah will become active as a delivery point three months after the approval of the first warehouse company in this location.
(Reuters - Reporting by Polina Devitt; Editing by David Goodman and Emelia Sithole-Matarise)