Related News

FSB fires warning to commodity traders over liquidity risks

Jansma to become Trafigura CFO as Salmon steps down

Trafigura bags US$560mn ECA-backed deal to supply gas to Japan

Commodity traders are more cash-rich than ever – but where does that leave banks?

Trafigura upsizes samurai loans

Hamburg-headquartered metals giant Aurubis says it could face losses totalling hundreds of millions of euros after paying inflated invoices for shipments of copper and precious metals that never reached its warehouses. 

In a statement issued late on August 31, the company says it uncovered “considerable discrepancies” in its metals inventory during a scheduled review, as well as issues with specific shipments of metals to its recycling business. 

Aurubis, Europe’s largest copper producer, says 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 undertaking an internal investigation and aims 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 says, adding that its forecasts for the 2022/23 financial year have been downgraded. 

Angela Seidler, vice president, investor relations and corporate communications at Aurubis, says shipments and samples of metals “had been manipulated to Aurubis’ detriment”. 

“Aurubis believes that the company paid inflated invoices and that shipments did not contain the respective metal,” she tells GTR. 

Christoph Tesch, head of corporate communications at the company, adds that the incident “relates to input materials, which contain copper as well as precious metals like silver and gold”. 

“The metals never reached our site; essentially we paid for something that never came to operations,” he tells GTR. “Who it is needs to be thoroughly investigated now.” 

The case is not believed to be connected to a criminal investigation announced in June – when German police issued arrest warrants for Aurubis employees and external individuals suspected of theft from its precious metals business – though any potential link will also form part of the company’s investigations. 

The company said after the June incident that its involvement in precious metals means it is “fundamentally at risk of becoming the focus of criminal activity”.  

“We therefore have high prevention and security standards in place,” it said at the time. “Nevertheless, we have taken this incident as an opportunity to thoroughly analyse and revise these standards once again.” 

Aurubis says this week it is undertaking a fresh review of metal reserves, and has engaged internal and external experts to improve security. 

Tesch was unable to comment on the timeframe for the latest incident, saying that will also form part of its investigations. 

The announcement could further impact perception of risk in the metals market, following a US$577mn nickel fraud scandal revealed by commodity trader Trafigura in February, and a market notice issued by the London Metal Exchange saying nickel inventories were found to contain stones instead. 

Ioannis Masvoulas, an analyst for metals and mining at Morgan Stanley, said in a client note the Aurubis incident “raises uncertainties around inventory management”. 

Jean-François Lambert, founder and managing partner of Lambert Commodities, says lenders will likely be “increasingly demanding in terms of security” and could cap their appetite for the metals sector.