Missing metals hit a green economic pressure point

October 25, 2017 An electric copper wire is seen in this chart. Picture taken on October 25, 2017. REUTERS/Max Rossi Get license rights

MILAN, Sept 1 (Reuters) – Criminals are setting their sights on the green transition. That’s a lesson from the troubles of German copper producer Arupis ( NAFG.DE ), whose shares fell 15% on Friday after it revealed a shortage of inventory that it concluded was linked to illegal activity. As demand outstrips supply for key metals such as copper, such fraud risks are becoming more common. This is a problem for the world’s transition to low-carbon energy.

Metal scams seem to be on the rise. In February, global commodities trader Trafigura posted a $577 million charge after discovering that some of its nickel cargoes were missing goods. On Thursday, copper producer Arupis said It found large discrepancies in inventory levels at its Hamburg recycling center, which removed used copper and precious metals from discarded computer circuit boards.

An initial estimate of the €3 billion company comes after a separate theft case in June, suggesting the missing metals could lead to at least €100 million. That’s about a fifth of its previously forecast pre-tax profit of between 450 million euros and 550 million euros for the fiscal year ending in September.

The sufferings of arubis draw attention to the pressure point of the green change. Shifting away from fossil fuels requires large amounts of copper, which is used in large quantities to expand and improve power grids and to build electric vehicles, wind turbines and solar farms. However, supply may struggle to meet the demands of the green economy.

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Global production of refined copper products is expected to grow 4% annually to about 26 million metric tons in 2023, according to International Energy Agency data. Recommends. And it will expand to about 30.1 million tonnes by 2031 McKinsey. But the consultancy reckons global demand will reach 36.6 million tonnes by the start of the next decade, leaving a gap of more than 6 million tonnes a year.

The rush to electrify the world, coupled with supply constraints, is driving up prices Copper and other commodities that are key to a low-carbon economy. This is a good thing for producers, miners and traders who deal with these commodities. But this makes them vulnerable to fraud.

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Germany’s Arupis, a major European producer of copper rods, sheets and wires, said on August 31 that it would not meet its full-year pre-tax profit target after finding „significant discrepancies” in its inventories.

The 3 billion euro company, a leading producer of recycled copper, said it may have been the victim of „criminal activity” and will miss its pre-tax profit target of between 450 million euros and 550 million euros. Financial year to end of September.

Shares of Aurubis were down 15% at 65.22 euros as of 1132 GMT on September 1.

Editing by Liam Broad, Streisand Neto and Oliver Daslick

Our Standards: Thomson Reuters Trust Principles.

The views expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Principles of Trust.

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