Gold and Silver Maintain Value
The second quarter saw a slide in prices for many metals, as world economic issues and elevated interest rates influenced the market. However, gold and silver maintained some strength due to investor involvement, said a prominent smelting firm.
Recently, Boliden, a leader in the fields of mining and smelting, issued an update on its financial performance and metals market trends from the second quarter of this year. Unfortunately for its investors, it was not a period of financial gain.
“The metal markets developed weakly during the second quarter. Growing concern over worsening global economic prospects, especially in China, had a negative effect on demand,” the report noted. “The global inflation rate declined. However, inflation remained at high levels all over the world, leading several major central banks to raise policy rates during the quarter. This suppressed demand for metal.”
In addition, an unfortunate fire at the smelter last June caused a significant reduction of material Boliden was able to recover, leading to a dramatic 20 percent decrease year-over-year for the weight of e-scrap processed. The fire also negatively impacted company revenues and profits.
Metals Pricing Overview
The second quarter saw a decrease in copper prices, hovering around $8,464 per metric ton. This is a drop of roughly 11 percent when compared to the same period last year.
“The copper price fell by 5% during the quarter, despite strong data regarding current global demand,” Boliden stated. “The price was held back by worsening economic prospects especially in China, combined with a strong USD.”
In stark contrast to the downturn in pricing for Zinc, nickel and lead, gold and silver saw a rise in value. It was observed that gold surged to $1,977 per troy ounce with an increase of 6 percent from last year, and 5 percent from the first quarter of 2023. The price of silver also rose to $24.10 an ounce, up 7 percent since the start of this year and increasing by the same 7 percent compared to 12 months ago.
Investors’ concerns about economic uncertainty provided a boost for the precious metals. “Concern in the financial market pertaining to the debt ceiling in the USA, in combination with expectations of future policy rate cuts, supported precious metal prices,” Boliden stated.
However, financial projections were seen to be the force behind a sharp decline of 8 percent in palladium prices, with investors reportedly making short bets against the metal after it had hit an all-time high.
Fire Ruins Electrolysis Facility
The last quarter proved to be especially challenging for Boliden after a severe fire sparked at Rönnskär on June 13. The blaze consumed the electrolysis plant in its entirety, resulting in losses estimated around $8.5 million. Additionally, the facility was handling approximately 10,000 metric tons of copper when it went up in flames.
According to Boliden’s estimates, the fire resulted in a sizable drop of about $19 million in second-quarter earnings, attributable to canceled deliveries and lost production.
“Boliden is conducting an investigation and is in discussions with insurance companies regarding compensation for both the destroyed electrolysis plant and the loss of production,” the firm asserted.
Regarding e-scrap, Rönnskär received 16,798 metric tons, amounting to a decrease of 20 percent compared to the same period last year, which was also 12 percent lower than in Q1.
In the second quarter, electronic scrap comprised a considerable 34 percent of the feedstock received by Rönnskär and nearly 10% of all mined and recovered material processed by the smelter.
Operating across various mines and smelters in Europe, Boliden reported a total of $1.75 billion revenue in the second quarter, representing a 14 percent drop when compared to last year’s results and a 7 percent decline from the preceding quarter. The division experienced an operating profit of $71 million which was 22 percent lower than the same period last year, and 61 percent less than Q1 2023.
