Aurubis: green aims blackened in recycling scandal
The potential for fraud will not diminish given growing recycling requirements
Recycling offers a green alternative to disposal of unwanted goods. Free waste gets turned into green dollars in the reclamation of metals. Unfortunately, the buyers of scrap metals and products which contain these cannot be sure what they have purchased.
Tell that to Aurubis, the Frankfurt-listed metals smelter and one of the world’s largest metal recyclers. It has discovered “considerable discrepancies” in its expected metals inventories after paying for recyclable materials. These include items such as computer circuit boards. It had already reported missing metal worth €20mn earlier this year. Prosecutors are investigating possible links.
Issues with the provenance of higher value metals such as gold, copper and nickel have popped up before. Commodities trader Trafigura has accused Prateek Gupta and New Alloys Trading of defrauding it of half a billion dollars in a nickel transaction. Both deny any fraud. Bags of nickel in a London Metal Exchange warehouse actually contained stones and had come via another warehouse owned by rival trader Glencore. Other scandals involving metals have occurred in the west and China in recent years.
This “theft”, according to Aurubis, could be costly and worth €100mn-€200mn. Its share price plummeted 14 per cent on Friday, which suggests the problem could be larger than that. Analysts had estimated Aurubis would make an operating profit of €450mn this year, the equivalent of that decline. It has suspended profit guidance for this year.
Recycling non-ferrous metals, especially from used electronic equipment, requires time-consuming screening and extraction. Suppliers usually get paid first. Others, such as Swedish miner Boliden and Mitsubishi Materials, have European metals recycling facilities.
The potential for fraud, either from external suppliers or internal testers, will not diminish given growing recycling requirements.