Europe’s largest copper producer says it has fallen victim to a massive theft

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Eurobis, Europe’s largest copper producer, is investigating a suspected plot between suppliers and employees after it revealed that minerals worth hundreds of millions of euros had disappeared from its stocks.

Shares of the company fell as much as 17 percent Friday morning in Frankfurt after it warned late Thursday that it would miss its full-year profit target after discovering “criminal activity” that could result in a “low triple-digit loss.” Hit the million euro scale.

Orbis said a company-wide investigation looking into whether suppliers worked with employees to tamper with scrap metal records in its recycling business was due to conclude by the end of September, and that police were involved.

“It is difficult to provide specific information before the investigation is concluded,” a spokesperson for the company told the Financial Times, adding that given the large volumes, the alleged theft is likely to include items containing metals such as scrap electronics and other precious metals.

The Hamburg-based company, which had revenues of €18.5bn last year, is Europe’s largest copper smelting and recycling group, with processing sites across the region, including a large complex south of its home city.

Aurubis does not mine ore itself but has built a business out of recycling metal concentrates, scrap metal and recycling materials containing minerals from mining and electronics companies. Its website states that it sources mineral concentrates from “more than 30 mining partners and a few dealers.”

And the police raided the company last June, as part of an investigation related to the loss of goods worth 20 million euros, which led to the arrest of six people, some of whom work for the company.

Orbis said he did not believe the two conditions were related. The Hamburg Public Prosecutor said it was continuing its case against 12 defendants in connection with the “intensive searches” that took place in June.

This scandal is the latest to shake the metals industry, and raises questions about its commitment to compliance, oversight and security protocols to limit the spread of fraud and theft.

Global commodities trading group Trafigura this year accused a trader of masterminding a $590m nickel scam, while in a separate scandal bags of nickels in LME warehouses were found to be filled with rocks instead. The reputation of the industry has also been affected by a series of scams and thefts in China in recent years.

Since the June raid, the company said it has begun implementing additional security measures, including more random inspections and tighter control of the gates through which trucks loaded with minerals enter and exit.

On Thursday, the company said it would default on its previous guidance of 450 million euros to 550 million euros in pre-tax earnings for the 2023 financial year because of the alleged theft. It added that it would be able to absorb losses, which would not affect its capital spending or growth plans.

German steelmaker Salzgitter, which owns 30 percent of Eurobis, also on Thursday suspended its full-year guidance, saying it would give shareholders more information once the copper producer finishes its investigation and gives more details on the scale of the theft.