The fire at Boliden Rönnskär's electrolysis plant had a significant impact on Boliden's operating result during the company's second quarter, despite the incident occurring just over two weeks before the end of the period. The financial implications amounted to hundreds of millions of kronor.
The company states in the report that the operating result for the second quarter has been negatively affected by 200 million kronor due to lost production and canceled deliveries at Boliden Rönnskär.
The report also reveals that the entire recorded value of the electrolysis plant, amounting to 88 million kronor, has been written off. Additionally, Boliden has set aside 75 million kronor for the costs associated with the demolition and remediation of the fire-damaged area.
Furthermore, the company states in the interim report, "The operating result for the second quarter is also estimated to have been impacted by the fire, with a negative effect of 200 million kronor attributed to increased stockpiles of slag from Swedish mines."
Partial production resumed at the smelter in Skelleftehamn on June 24th, and as of July 13th, production has been fully restored in all areas except for the burned-down electrolysis plant.
Boliden's CEO Mikael Staffas will be glad to leave a tough period behind him.
"Boliden is conducting an investigation and engaging in discussions with insurance companies regarding compensation for the destroyed electrolysis plant and production losses. No provision has been made for the melted process inventory in the electrolysis plant as it is deemed recoverable. Approximately 10,000 tons of copper were in production at the time of the fire. The company is actively working on transitioning its customer base from copper cathode customers to copper anode customers. The absence of an electrolysis plant has a significant negative impact on profitability, as it results in reduced metal premiums, refining fees, and the quantity of free metals," Boliden explains in the report.
In addition to the fire, Boliden faced challenges in other areas during the second quarter.
In June, the mining and smelting company made the decision to place the Tara Mine in Ireland on care and maintenance (a term used in the mining industry to describe processes and conditions at a closed mine site where there is potential to recommence operations at a later date), which took effect on July 5.
Production at Rönnskärsverken has been fully resumed since July 13, with the exception of the burned-down electrolysis plant, the company says in the interim report.
Other factors that the company summarizes for the second quarter include deteriorating prices and terms, as well as low production of metal in concentrate within the Mines division, resulting from low grades.
"The metal market performed weakly during the second quarter of the year. Growing concerns about deteriorating global economic prospects, particularly in China, negatively impacted demand," writes Boliden.
Boliden's profit after financial items amounted to 640 million kronor during the second quarter, compared to nearly 4 billion in the same period in 2022.
At the stock market opening, Boliden's shares dropped by nearly eight percent.