Europe’s largest copper producer, allegedly involved in a $198 million metal swindle, potentially implicating insiders.

Europe's largest copper producer, allegedly involved in a $198 million metal swindle, potentially implicating insiders.

Aurubis AG Reveals €185 Million Metals Shortage Due to Theft

In a surprising turn of events, Hamburg-based copper producer Aurubis AG announced in a press release that it has uncovered a staggering €185 million metals shortage. The shortage was detected after an extraordinary inventory carried out in August. This revelation has left the company and investors stunned, as Aurubis AG is an industry leader, generating $18 billion in revenue last year.

The shortage was attributed to inflated invoices for scrap metal and other input materials paid by the company. It was determined that the samples provided by suppliers had been manipulated, leading to the discrepancy in inventory. As a result, Aurubis AG had already disclosed in August that it would not meet its profit targets.

Shares in the company experienced a significant decline of up to 15% following the announcement, before partially recovering. Aurubis AG CEO, Roland Harings, expressed the company’s commitment to resolve the matter. He stated, “We are working closely with investigative authorities and at full speed to get to the bottom of the criminal activities. We have pulled all necessary internal resources together and are using external forensic specialists.”

To mitigate some of the losses incurred from the theft, Aurubis AG received a $30 million insurance payout and took possession of the assets belonging to the criminals involved. The identity of these criminals remains unknown, and the issue is currently being investigated by Germany’s State Office of Criminal Investigation. However, it was revealed that the company had been targeted by previous criminal activities, with authorities looking into both current and former employees, as well as external workers.

While it is unclear if the theft ring discovered in June is connected to the recent shortfall, the investigations conducted earlier were focused on intermediate products, similar to the scrap metal shortages identified in August. Aurubis AG emphasized that it had no involvement in any illicit activities, aiming to reassure investors.

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Following the announcement, investors initially responded positively, pushing the stock up by 5.6%. However, the gains were later moderated, and the shares were up 1.5% during early trading on the following day.

A String of High-Profile Thefts Causing Concern

Aurubis AG’s missing metals joins a growing list of high-profile thefts that have raised concerns about the security of shipping infrastructure for metals traders. The complexity of commodities trading, with its bureaucratic procedures and extensive paperwork, makes it susceptible to corruption, predominantly involving those with insider access to records.

In a similar incident earlier this year, Trafigura Group, a commodities trader, faced impairment charges of over half a billion dollars after discovering that the nickel cargoes it had traded actually contained bags of rocks instead of valuable materials. Interestingly, it was revealed that the shipment belonged to JPMorgan, the world’s largest bank.

Aurubis AG assured customers that their operations were unaffected by the shortage. However, the company is continuing its investigation to determine the impact of the theft on its suppliers.

The crises in the commodities market have also had repercussions on the London Metal Exchange (LME), a prominent trading house that processed over $15 trillion worth of trades last year. In response to the Trafigura incident, the LME briefly halted nickel trading to cope with the situation.

The recent revelation by Aurubis AG highlights the growing challenges faced by the industry, emphasizing the need for improved security measures and vigilance within the commodities trading market. As investigations progress, the copper producer aims to fully unravel the extent of the theft, providing insight and closure to this unsettling event.