Salzgitter sells Aurubis bonds to finance Salcos project and business purposes

The funds will also be used to diversify the structure and timing of the group's financing

German steel producer Salzgitter has begun placing €500 million in senior unsecured bonds issued by copper producer Aurubis, according to a company statement.

The funds will be used for general business purposes, further expenditure on the first phase of SALCOS, and restructuring measures. The bonds are also being issued to diversify the group’s financing structure and maturities.

This move, Reuters notes, has ended speculation about a takeover of Salzgitter, which owned 29.99% of Aurubis, as a stake of more than 30% would have triggered a mandatory offer to the remaining shareholders.

The seven-year bonds, maturing in 2032, offer investors a fixed annual interest rate of 3.375% and can be exchanged for existing Aurubis shares at an initial exchange price of €145.8.

In September this year, Salzgitter announced its decision to postpone the next stages of its large-scale Salcos green project for three years. Its total cost is around €2.5 billion, of which €1 billion is financed by government grants.

The first phase, which is already underway, involves the launch of a 100 MW electrolyzer, the construction of a direct reduction plant, and an electric arc furnace. However, the company has postponed the next stages, which were supposed to reduce emissions in the steelmaking sector by 95%, until at least 2028-2029. Previously, the investment decision was planned for 2026.