Boliden Q1 profit dips, but company remains bullish long-term

Despite facing several production hurdles in the first quarter of 2024, Boliden pressed forward with significant investments in Rönnskär and the Boliden area. While the company's operating profit dipped compared to 2023, CEO Mikael Staffas remained optimistic about the future, pointing to strategic decisions aimed at long-term growth.

On March 18, Boliden announced its decision to invest 2.5 billion Swedish kronor in the Boliden area.

On March 18, Boliden announced its decision to invest 2.5 billion Swedish kronor in the Boliden area.

Foto: Leif Andersson

Boliden2024-04-23 13:16

In the interim report released Tuesday, Staffas acknowledged the quarter's challenges, including harsh January weather conditions and political strikes in Finland. However, he emphasized Boliden's success in maintaining production levels, particularly within the Mines division. The company's commitment to future-proofing its operations was further underscored by several key decisions.

Boliden's Q1 operating profit settled at 1.212 billion kronor, falling short of analyst predictions compiled by Bloomberg (1.476 billion kronor). This figure also reflects a decrease of over 1.8 billion kronor compared to the same period in 2023.

Mikael Staffas expresses a generally positive long-term outlook for base metal demand. However, he emphasizes the need to maintain competitiveness throughout economic cycles.

Staffas highlighted ongoing major investments in Aitik, Kristineberg, and Odda, while emphasizing efforts to improve operational productivity through new technologies and work methods. Another strategic priority, as outlined in the report, involves developing a robust portfolio of metals crucial for the green transition.

A significant step in this direction was Boliden's launch of Low-Carbon Nickel, boasting emissions amounting to only 15% of the global average. "I am convinced this is the right path forward, not only for us but for the entire value chain," Staffas wrote in the report.

Production challenges were not entirely absent, with the Boliden area experiencing a lower enriched volume compared to both the previous quarter and the first quarter of 2023. Technical issues at a concentrator production line resulted in a week-long shutdown.

Rönnskär's production of all metals, except lead, was lower compared to both the previous quarter and last year.

However, positive news arrived on March 18 when Boliden announced a 2.5 billion kronor investment in the Boliden area. This investment focuses on dewatering and paste plants specifically designed to utilize enrichment sand as backfill material for the Kankberg, Renström, and Maurliden mines. 

This strategic move is expected to extend production in the Boliden area by roughly ten years, reaching the late 2030s. The majority of these investments are slated for completion between 2024 and 2026.

Rönnskär's production also faced setbacks, with all metals except lead falling short of targets compared to both the prior quarter and the previous year. Extreme winter conditions in January caused a power outage, leading to a ten-day halt in the sulfuric acid plant.

Looking ahead, positive developments emerged. In March, Boliden announced plans to construct a new electrolysis plant in Rönnskär, replacing the one destroyed by fire in June 2023. This new facility is projected to gradually restore Rönnskär's copper cathode and precious metal production to full capacity by the second half of 2026.

Metal prices exhibited volatility throughout the quarter, with price declines in January and February followed by a March uptick, suggesting a potentially brighter outlook for global economic development.

"We naturally hold a generally positive long-term view on the demand for base metals," Staffas wrote. "However, maintaining competitiveness throughout economic cycles remains crucial. We are confident in the strength of our current metal portfolio, which is a key driver behind our continued investment in existing operations."

Mikael Staffas notes that there is intensive work underway to complete major investments in Aitik, Kristineberg, and Odda.

Boliden produces metals and conducts operations in exploration, mines, smelters and recycling. The company has approximately 6,000 employees and an annual turnover of approximately 80 billion kronor.