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Recycling offers a green alternative to disposing of unwanted items. During metal recycling, free waste becomes green dollars. Unfortunately, buyers of scrap metal and products containing it cannot be sure what they are buying.
Please tell Aurubis, a Frankfurt-listed metals smelter and one of the largest metals recyclers in the world. After paying for recycled material, it found “considerable variance” in its expected metal stock. This includes items such as computer circuit boards. Earlier this year, the company had reported the disappearance of metal worth 20 million euros. Prosecutors are investigating possible links.
The question of the provenance of high-value metals such as gold, copper and nickel has arisen before. Commodities trader Trafigura has accused Prateek Gupta and New Alloys Trading of defrauding him of $500 million in nickel transactions. Both have denied any fraud. The sacks of nickel in the LME warehouse, which actually contained gemstones, had been shipped through another warehouse owned by rival trader Glencore. There have been other scandals involving metal in the West and China in recent years.
Such “theft” could be costly, worth between 100 million and 200 million euros, Aurubis said. Its shares plunged 14% on Friday, suggesting the problem could be bigger than that. Analysts expect Aurubis to post an operating profit of 450 million euros this year, equal to the drop. The company has suspended its profit guidance for the year.
Recycling non-ferrous metals, especially from scrap electronic equipment, requires time-consuming screening and extraction. Vendors usually get paid first. Others, such as Swedish miner Boliden and Mitsubishi Materials, have European metal recycling facilities.
Given the ever-increasing take-back requirements, the potential for fraud from external suppliers or internal testers does not decrease.
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