Boliden - green copper to the world

Stocks
,
1

Let’s start a thread on Boliden since I couldn’t find one myself.

Boliden is a company listed on the Swedish stock exchange, whose main business is ore processing.

Boliden is divided into two business areas:

Mines and exploration, and Smelters

Five mines:

  • Boliden Aitik copper mine
  • Boliden Garpenberg zinc mine
  • Boliden Kevitsa nickel and copper
  • Boliden Tara Mines zinc mine
  • The Boliden Area gold and tellurium

Five smelters:

  • Rönnskär: One of the most efficient copper smelters, holding a leading position in electronics recycling. Main products: copper, zinc, lead, gold, silver. By-product: sulfuric acid.
  • Harjavalta: One of the most efficient copper and nickel producers in the world. Main products: copper, nickel, gold, and silver. By-product: sulfuric acid.
  • Kokkola: Europe’s second-largest zinc smelter. By-product: sulfuric acid.
  • Odda: Significant producer of zinc and zinc alloys.
  • Bergsöe: Lead recycling and recovery.

Boliden has invested for several years in the Harjavalta Industrial Park to increase production capacity. There is a lot of buzz in the area within the metal processing sector. BASF is investing in a battery material plant, which is currently under construction, Nornickel is doubling its nickel production, and Boliden is expanding its nickel production.

The company’s cash flow is strong, although large investments are a burden, but the outlook for raw materials is bright, for example, as the automotive industry electrifies.

There has been much talk about the rise in raw material prices; for example, the price of copper has doubled in a year, and the same phenomenon has occurred with many other metals.

The company is solvent, generates good cash flow, and is a player that invests in sustainable development. There has been a lot of hype about the “year of raw materials,” so why has Boliden been completely overlooked in this discussion?

11 Likes
2

What makes copper green in this company? The headline could be refined a bit so it doesn’t sound like greenwashing.

1 Like
3

“Boliden has introduced Green Copper products to the metal market, including low-carbon footprint copper and recycled copper. Boliden’s copper has a significantly smaller carbon footprint than the global average. This is one of the concrete actions we are taking to advance our vision of being the world’s most climate-friendly and respected metal producer.” Quote from the company’s website.

2 Likes
4

This is indeed an interesting company. Boliden has been featured in the “Energy Mineral Markets” thread. If there’s enough discussion to sustain it, there’s no reason why this thread wouldn’t be appropriate.

The Kokkola zinc smelter also produces sulfuric acid as a byproduct, if you want to add that detail.

5

To my eye, the Q1 results were good. Strong cash flow and fairly predictable business. https://vp217.alertir.com/afw/files/press/boliden/202104277673-1.pdf

The price of copper has continued to rise, so there should be upside potential there as well. (Other metals also have an impact)
As a plus, I see diversified operations (mines + smelters); they don’t just sell concentrate but also refine it further.
This year, dividends have been SEK 8.25 + SEK 6 capital repayment. The stock is starting to get expensive, but it may withstand inflationary pressures well, as raw material prices are the first to rise, as has already been seen in the United States.

1 Like
6

What happened to the Pori electrolysis plant, or is it considered part of the Harjavalta complex here?

7

Boliden Invests in Pori Harbor

4 Likes
8

The Q3 report just came in, it was a bit below estimates, but the future looks very strong. The balance sheet has strengthened and metal prices are at peak levels. Electrification and infrastructure should support the company, as well as rising inflation. Another company in my portfolio in terms of copper is Lundin Mining, which has also come down from its highs.

image
image682×322 55.4 KB

https://vp217.alertir.com/sites/default/files/report/boliden_q3_2021_presentation.pdf

3 Likes
9

I agree with this. A slightly soft report, as could be expected. Major investments have been initiated, which will significantly consume cash flow for now, but in the end, it will pay off. I believe the company will be in a very good position in Q1 2022 when production is in full swing. Really big moves, e.g., the NOK 700 million (Oddan 700 miljoonan) investment in a new factory.

1 Like
10

Since you mentioned Lundin, which has a pretty similar production palette, I’ll put its Q3 summary here as well:

https://www.lundinmining.com/site/assets/files/8365/211027_-_lundin_mining_-_q321_financial_results_-_final.pdf

If you look at the 9-month figures, the pace has been quite strong. For example, in US dollars, EPS went from 0.16 to 0.73, and net cash from -124 to +391. Cash flow is therefore at a very strong level, and Q4 should be the best quarter of the year, meaning EPS will likely exceed a dollar.

Here are DNB’s forecasts for both companies:

EV/EBITDA forecasts are even below 3, so it’s a bit difficult to understand such a low valuation.

Well, I am personally so convinced of the impact of the green transition on base metals that I strongly believe in both of these horses, even though Lundin currently has by far the larger stake.

1 Like
11

Boliden has risen quite nicely lately. The price of nickel has risen considerably.
Does anyone else have any thoughts or views on this?

12

Metal prices support Boliden’s rise. Money is pouring into the coffers at a completely different pace than before.

13

Can anyone more knowledgeable advise how this Boliden share split works in practice? Apparently, they automatically redeem them at 11.50 SEK. “split shares” The dividend of 15 SEK per share already arrived in the account earlier. A peculiar capital shuffle…

14

Google translation -

The fire that occurred at Rönnskär on Tuesday evening, combined with the lower quality of the crushed copper and nickel at Kevitsa, will impact the second quarter operating profit by an estimated 700 million SEK, Boliden states in a press release.

15

It’s looking bad. There could be significant pressure on earnings performance.

16

My interest in this company was piqued over in the raw materials thread (discussions about the price increases of rare Ge and Ca elements), and at first glance, it seems like a very interesting company. It is a company generating quite nice cash flow, especially when considering that they have also made significant investments in the business. Furthermore, when looking at the history of return on invested capital, this looks very attractive:

image
image1715×554 29.3 KB

The valuation doesn’t seem stretched at all, either. Of course, the fire at Rönnskär brought a clear drop in the price. But it seems its impact will remain relatively small for this year: Press releases - Boliden SEK 200m Q2 EBIT impact and a SEK 88m write-down on the balance sheet.

Are there any estimates regarding the contribution of different minerals to the company’s results? Have there been any signs yet of a premium in product prices offered by green production?

I need to study the company’s materials in more detail, but based on this quick look, it will likely end up as a watchlist position.

1 Like
17

Boliden released a capital markets update today, so it’s a good time to wake up the thread a bit.

Boliden’s virtual event is a Flik production. It doesn’t look like the broadcast is available on the Inderes website, so the broadcast starting at 3:00 PM can be found via that link.

https://boliden.videosync.fi/2024-03-18-vcmd2024

I haven’t followed Boliden’s development closely, but based on the news flow, last year seemed challenging. Last summer, there was a major fire at the Rönnskär copper smelter in Skellefteå, where the tank house (elektrolyysihalli) was completely destroyed. At the same time, production and exploration at the Tara zinc mine in Ireland were halted due to falling zinc prices and rising costs, and ore grades were declining at the Kevitsa mine.

Consequently, costs increased more than expected. In February, however, Boliden published a fairly reasonable Q4’23 report. Currently, the share price is at nearly the same levels as last July, but the price will largely follow the development of metal prices. https://investors.boliden.com/en/press/bolidens-fourth-quarter-good-cash-flow-despite-intensive-investment-period-2201535

This morning, Boliden announced it is investing a total of 4.8 billion SEK in a new tank house at Rönnskär. According to the release, capacity will remain at 230 kilotonnes, and full capacity is expected to be reached in the second half of 2026.
Press release: https://news.cision.com/boliden/r/boliden-s-capital-market-update--investment-in-new-tank-house-at-ronnskar,c3947116

The CMD presentation slide deck is already available on Boliden’s website, with the Rönnskär investment detailed at the beginning. Link (pdf):
https://investors.boliden.com/sites/boliden-ir/files/Investing_in_long-term_sustainable_profitability.pdf

Additional information on the slide shows the start of construction work is in May of this year.
Boliden CMD24 - 1

Boliden CMD24 - 2

2024 is likely not expected to be very good. For Q1, the ongoing strikes in Finland add their own impact to the start of the year, as seen on page 18 of the CMD presentation.

Boliden CMD24 - 3

At the Capital Markets Day, interest will likely focus more on expectations for 2025 and 2026. The company has several investment projects underway at many sites, such as the Odda expansion. Boliden expects 2024 investments to be 15.5 billion SEK, which is 1.5 billion SEK more than previously estimated.

Boliden CMD24 - 4

According to the release, more details will also be provided at the event regarding the low-carbon nickel developed by Boliden.
Boliden CMD24 - 5

9 Likes
18

Should I buy Boliden for a book-entry account or an equity savings account?

I know that in an equity savings account, a significant portion of the tax benefit is lost because you don’t get a withholding tax credit, but I’m thinking more about situations like last year’s split + redemption scheme, which cause an annoying amount of hassle without a tax wrapper. Have there been these types of events often, and are they to be expected in the future as well?

19

I’ve occasionally followed Boliden and its share price development. Now, mining companies have been particularly interesting, as I’ve noticed SSAB’s significant rise in a couple of weeks, e.g., due to USA tariff speculation.

Today, strong results from Boliden

  • Revenues: SEK 25,785 m (20,754)
  • Operating profit: SEK 4,098 m (2,096)
  • Operating profit excl. PIR*: SEK 3,814 m (2,017)
  • Free cash flow: SEK 4,264 m (1,663)
  • Earnings per share: SEK 10.95 (6.06)

The initial share price reaction was quite soft, but it seems to have accelerated towards the evening.

2 Likes