Copper giant, Aurubis (ETR: NDA), has shocked the market with the news it might have been defrauded of an unestablished sum, potentially amounting to hundreds of millions of dollars. The company’s stock crashed as much as 15% on 01 September 2023 in Frankfurt, wiping about US$540M off its market capitalization. Its market cap now stands at around €2.9B.
The Hamburg based company had started to notice discrepancies in its inventory and shipments of input materials for its recycling area but is currently unable to establish the true extent of the damages.
Aurubis has stated that the findings suggest it is “the target of… criminal activity” and that the matter is being pursued by Germany’s State Office of Criminal Investigation. It is also commencing an internal investigation to provide more clarity on the matter in early October.
“It cannot currently be ruled out that the damages might be in the low, three-digit-million-euro range,” the company said, adding that its forecasts for the 2022/23 financial year have been downgraded.
The announcement follows a US$577M nickel fraud scandal discovered by Trafigura in February, and a market notice issued by the London Metal Exchange saying nickel inventories were found to have contain stones instead. Aurubis’ news, combined with the LME scandal could work to affect investors’ confidence in the metals market.
Management believes that some of its suppliers have altered information regarding the scrap metal they provided and have colluded with personnel in Aurubis’s sampling department to conceal it.
Aurubis, which produces roughly 1.1Mt of copper sheets annually, stated that it could not ascertain the full cost of the theft, but it cannot disregard the possibility of losses in the low hundred-million-euro range.
Consequently, the company released a statement saying that it would no longer be able to meet its profit forecast of between €450M (£400M) and €550M for the year.
Steel manufacturer Salzgitter, which owns a 30% stake in Aurubis, has also suspended its results guidance for the financial year. Last June, Aurubis was the victim of a similar heist that targeted the “high-value precious-metal bearing intermediates” generated during the refining process, and six people have since been arrested and are awaiting trial.
