"Record Sales Thanks to Gold and Silver"...Korea Zinc and LS MnM, Shining Performance Amid Refining Slump

[Financial News] Korea Zinc and LS MnM are expected to achieve good results in the second quarter despite the slump in non-ferrous metals like zinc and copper, thanks to the soaring prices of gold and silver. The international precious metals prices have been on the rise due to geopolitical risks and increased demand for safe assets, significantly boosting sales. However, this boom is seen as a temporary phenomenon due to external variables, and the recovery of competitiveness in the refining sector is considered a key task in the long term. 
According to the industry on the 11th, Korea Zinc's standalone sales for the second quarter of this year are 2.4614 trillion won, and operating profit is 266.5 billion won, up 23.8% and 3.5% respectively from the same period last year. Quarterly sales hit a record high.
The main driver of the strong performance is precious metals. In the second quarter, gold and silver accounted for 17% and 31% of total sales, respectively, up 8 percentage points (p) and 2%p from the same period last year. Gold sales surged more than twice to 773.2 billion won, and silver sales increased by 39.8% to 1.5193 trillion won. This is interpreted as a result of the preference for safe assets such as gold and silver, reflecting the deepening geopolitical risks and global economic uncertainties such as tariff negotiations.
The price increase was also clear. In the second quarter, the gold price rose for the seventh consecutive quarter to $3,282 per ounce, and the silver price rose for the sixth consecutive quarter to $33.6. Compared to the same period last year, gold rose 40.4% and silver rose 16.5%. The strong trend continued into the third quarter, with the international spot price of silver at $39.1 per ounce as of July 24, up 35.27% from the beginning of the year, hitting the highest level since 2011. During the same period, the gold price also rose by 29%.
On the other hand, the non-ferrous metals business, including zinc, lead, and copper, fell into a slump due to price declines. In the second quarter, the price per 1MT (1MT=1000kg) was $2,629 for zinc (down 7.4% year-on-year), $1,945 for lead (down 10.29%), and $9,510 for copper (down 2.56%), with both sales volume and revenue either decreasing or remaining flat.
LS MnM is also expected to offset the deterioration in refining profits with precious metals. The first-quarter sales were 2.8397 trillion won, a slight increase from the same period last year. The refining fee (TC/RC) plummeted to $20-30 per ton from $80-90 two years ago, but the rise in gold and silver prices mitigated the impact.
LS MnM's gold and silver are products with a purity of 99.99% or higher produced in the final process of copper refining, and the company has the largest precious metal production capacity in Korea, producing △60 tons of gold and △1200 tons of silver annually.
In contrast, Young Poong, which does not produce gold, is expected to continue its slump. Young Poong's operating loss in the first quarter of this year expanded by 30.3% to 56.3 billion won compared to the same period last year. With 84% of refining sales concentrated on zinc ingots, it is expected to be directly hit by the decline in zinc prices and the plunge in refining fees in the second quarter. 
Young Poong can recover gold and silver from the sedimentation pond within the Seokpo Refinery, but some are being treated as waste according to the Ministry of Environment's integrated environmental permit conditions. The company is in discussions with the Ministry of Environment on soil purification and treatment deadlines and is seeking long-term recovery plans for valuable metals.
However, the industry is cautious that the boom in precious metals is not permanent. With oversupply from China and a slowdown in global demand, there is a need to establish a structural breakthrough in the refining business. An industry official said, "Precious metal prices can change rapidly depending on external variables," adding, "Investment and production efficiency improvements are needed to strengthen the competitiveness of the core business of refining." 

moving@fnnews.com Lee Dong-hyuk Reporter