Aurubis AG Faces Immediate Sharefall Amid Salzgitter Convertible Bond Deal

The German copper producer Aurubis AG (NAFG.DE) has been rattled by the market’s reaction to Salzgitter AG’s latest financial maneuver. In a swift move that underscores the fragility of shareholder confidence, Aurubis shares slid sharply on Wednesday, October 15, 2025, following Salzgitter’s issuance of €500 million in convertible bonds tied to Aurubis equity.

1. Mechanics of the Bond Issue

Salzgitter, a steel conglomerate with a significant stake in Aurubis, has chosen to monetize part of its investment through a non‑secured, unrated convertible bond (UCB) maturing in 2032. The bond carries an exchange right that converts into Aurubis ordinary shares at a predetermined ratio, effectively diluting existing shareholders. The €500 million nominal value was raised to finance Salzgitter’s “green steel” ambitions—a venture that, while commendable, has proven to be a double‑edged sword for Aurubis’s equity holders.

2. Immediate Market Impact

  • Price reaction: Aurubis’s closing price on October 13, 2025, stood at €115.70, already below its 52‑week high of €122.30 but still well above the 52‑week low of €64.10. The announcement sent the stock tumbling, with a drop of more than 7 % in early trading.
  • Volume surge: Trading volume spiked as investors rushed to reassess the value of their holdings, given the looming dilution.
  • Investor sentiment: Analysts noted that the market’s response was not merely a reaction to the size of the bond but to the structural implications—Salzgitter’s partial divestment signals a potential strategic shift away from the copper business.

3. Dilution and Ownership Concerns

The convertible bond’s terms mean that, upon conversion, the number of Aurubis shares will increase, thereby lowering each shareholder’s percentage ownership. For a company whose market capitalization hovers around €5.2 billion, this dilution could erode earnings per share and weaken the company’s bargaining power with suppliers and buyers.

Furthermore, Salzgitter’s reduced stake may alter governance dynamics. Historically, Salzgitter’s influence has been a stabilizing factor for Aurubis’s strategic decisions. Its retreat raises questions about future capital allocation and long‑term policy direction.

4. Strategic Context

While Salzgitter’s green steel initiative is a commendable step toward decarbonization, Aurubis’s core business—copper smelting and refining—remains a critical component of the global supply chain for power cables, building wires, and other electrical applications. The company’s diversified portfolio also includes precious metals and other by‑products, which help buffer against copper price volatility.

However, the market’s immediate sell‑off suggests that investors are wary of the potential misalignment between Salzgitter’s priorities and Aurubis’s long‑term growth prospects. The question is whether Aurubis can navigate this shift without compromising its competitive edge in copper production.

5. Long‑Term Outlook

  • Risk assessment: The convertible bond introduces a new layer of financial risk—if the bond is converted, the company’s capital structure will shift, possibly affecting credit ratings and borrowing costs.
  • Opportunities: On the upside, the proceeds from Salzgitter’s bond sale could provide Aurubis with additional liquidity to invest in higher‑margin segments or to hedge against copper price swings.
  • Stakeholder actions: Aurubis management must articulate a clear plan to address dilution, preserve shareholder value, and maintain strategic alignment with its core business. Transparent communication will be key to restoring confidence.

6. Conclusion

The €500 million convertible bond issued by Salzgitter has not only triggered an immediate share decline for Aurubis but also spotlighted deeper structural tensions within the company’s ownership and strategic trajectory. While the move may facilitate Salzgitter’s green steel ambitions, it poses tangible risks to Aurubis’s equity holders. Investors and analysts will now watch closely to see whether Aurubis can translate this financial maneuver into a sustainable, value‑creating outcome or whether the dilution will erode its market position over time.