Korea Zinc is smiling at the all-time high gold price… Extraction of 9 tons per year during smelting process

With the price of gold reaching an all-time high, the sale of gold from the smelting process Korea Zinc (010130)A positive impact is expected. Last year, gold accounted for more than 10% of Korea Zinc’s sales.

On the 25th (local time) at the New York Mercantile Exchange, the June gold price ended trading at $2,342.50 per ounce (1 ounce is 28.349523 g), up 0.2% from the previous day. It fell from $2,413.80 per ounce recorded on the 19th, but rose about 16% compared to the low $2,000 per ounce at the end of last year.

Korea Zinc is a non-ferrous metal smelting company that mainly produces and sells lead, but during the smelting process, it can also recover valuable metals such as gold, silver, and copper, as well as sulfuric acid. This is because concentrates (ores processed to a level that can be used as smelting raw materials or industrial raw materials) contain other metals in addition to zinc and lead.

The concentrate goes through the fumer (smelting process by-product recovery facility) process and becomes a concentrated slime. Kite slime contains about 20% silver and 0.1% gold. By removing impurities from the slime again and going through electrolysis (a process of decomposing the material by applying electrical energy to the material) and casting (a processing method of heating the material into a liquid and pouring it into a mold to solidify it), valuable metals can be extracted.

Smelting companies such as Korea Zinc pay mining companies for the purchase of concentrate, and the amount varies depending on the by-product content. As the price of gold rises, the purchase price also rises. Smelters and mining companies set metal recovery rates at the time of contract. For example, if the metal recovery rate is contracted to be 85%, and the smelter extracts 100%, 15% is the smelter’s share.

An official from Korea Zinc said, “Korea Zinc’s metal recovery rate is almost 100%, so it has a structure that generates additional profits when the price of gold rises.”

According to Korea Zinc’s business report last year, gold accounted for about 10.3% (KRW 755.687 billion) of the company’s total sales (KRW 7,291.069 billion). In 2022, gold accounted for 880 billion won (11%) of total sales of approximately 8 trillion won. Korea Zinc extracts approximately 9 tons of gold annually during the concentrate smelting process. At times, up to 13 tons were extracted.

Previously, Choi Moon-seon, a researcher at Korea Investment & Securities, predicted Korea Zinc’s first quarter sales to be 2.617 trillion won, up 3.6% from the same period last year, and operating profit to be 201.5 billion won, up 38.2%. Researcher Choi said, “Zinc and lead prices in the first quarter fell slightly compared to the fourth quarter of last year, but the rise in gold and silver prices offset this, and good performance is expected as precious metal shipments increase.”