Forecasts are emerging that Korea Zinc will set a new record for quarterly results in the fourth quarter this year as precious metal prices rise. Silver has recently climbed to a 45-year record high, and gold is also at an all-time high level. The start of exports of the rare mineral antimony to the United States in June is also expected to have a positive impact on the fourth-quarter outlook.
According to Korea Zinc on the 10th, as of the end of September this year, sales of silver and gold were 2.346 trillion won and 1.321 trillion won, respectively. Silver sales are close to 2024 sales (2.3484 trillion won), and gold nearly doubled from last year's sales (748 billion won). For gold, demand surged sharply as investors favored safe-haven assets.
Korea Zinc has a "Fumer" process at the Onsan Smelter that recovers additional rare metals such as gold, silver, and antimony from residues left after smelting main ores such as zinc and lead. When sludge and precipitates generated from smelting base nonferrous metals such as zinc and lead are fed back into the fumer facility for re-smelting, additional metal components can be extracted.
Global spot prices of gold and silver have continued to surge this year. According to the London Bullion Market Association (LBMA), as of the 8th (local time), the spot price of silver was $54.08 per ounce. After hitting a record high of $58.81 intraday on the 1st, silver has been moving around $55. The recent record high surpassed the January 1980 price ($49.95).
The rise in silver prices appears to be due to a surge in industrial demand driven by advances in artificial intelligence (AI), electric vehicles, and solar power. Half of the world's silver production is consumed for industrial use.
Gold prices are also at an all-time high level recently. On the same day, the spot price of gold was $4,228.3 per ounce, sustaining the short-term peak (4,299.6) reached earlier this month. Gold previously set an all-time high of $4,381.6 in Apr. Safe-haven demand has strengthened amid the U.S.-China trade dispute, and expectations for interest rate cuts in major countries have spread, sharply boosting demand.
Buoyed by higher gold and silver sales, Korea Zinc posted record results through the third quarter this year. Cumulative sales on a consolidation basis for the third quarter (January–September) rose 36.8% year over year to a record 11.818 trillion won. Operating profit was 803.4 billion won, up 33.2% from the same period last year.
Third-quarter sales were 4.1598 trillion won, up 29.7% from the same period last year. Operating profit came to 273.4 billion won, up 82.3% from a year earlier. As a result, Korea Zinc also achieved 103 consecutive quarters of operating profit.
The industry expects Korea Zinc to extend its earnings improvement into the fourth quarter on the back of higher silver and gold prices. iM Securities estimated fourth-quarter sales on a consolidation basis at 4.793 trillion won and operating profit at 396 billion won. Compared with the fourth quarter of last year, sales would rise 40.4% and operating profit 44.9%.
Kim Yun-sang, an analyst at iM Securities, said, "Korea Zinc is recovering overwhelmingly more metals than other smelters by building an integrated zinc-lead process," adding, "With key price indicators historically the most favorable, fourth-quarter results will be at a record high level."
Expanded exports of the rare metal antimony to the United States are another factor supporting the outlook for record fourth-quarter results. Used as an alloy in steel to increase product hardness, antimony has recently been employed as an essential metal in the production of munitions such as ammunition, missiles, and shells, as well as in automotive steel sheets. Korea Zinc is producing high-purity antimony of 99.9% or higher.
In the third quarter this year, Korea Zinc's sales of rare metals were 363 billion won, with antimony accounting for 69% (about 250 billion won). In the third quarter of last year, rare metal sales were 181 billion won. Korea Zinc began exporting antimony to the United States in June this year. This year's export target to the U.S. is 100 tons (t), and next year's target is 240 t.
As China, which has effectively monopolized antimony supply, has tightened export controls, antimony prices have also surged recently. According to the mining industry, the price per t of antimony jumped from $13,300 in January last year to $60,000 in June this year. As of September, it is being transacted at $51,000.
Analyst Kim Yun-sang said, "As China controls supply and demand for rare metals essential to advanced industries, prices have jumped and their share in results has increased." He added, "With governments, not the private sector, leading the building of supply chains for key minerals in the global market, Korea Zinc, which has world-class smelting technology, will stand out even more."