Boliden AB, a leading Swedish mining company, has seen its share prices in Stockholm grow by roughly 3 percent. This increase comes on the heels of an agreement with worker's unions and local management to reopen the economically viable Tara mine.
Shut down in July 2023 due to a fall in zinc price and various operational issues, the Tara mine is set for a resurgence. Thanks to a series of improvements in operational approaches and productivity, Boliden AB has been able to secure a deal to resume mining activities at this location.
The mine's reopening will kick off with a phased return plan for the employees, starting in the third quarter of 2024. The workers will go through an induction and retraining program, followed by a production ramp-up set to begin in the fourth quarter of the same year. The full production target is set for January 2025.
Boliden predicts its operating loss for the second half of the year to be around 25 million euros per quarter. This is an increase from the 13 million euros per quarter lost during the care and maintenance period. Consequently, Boliden is expected to register a one-time restructuring cost of around 30 million euros in the second quarter of 2024.
The primary component of the restructuring cost relates to a workforce reduction to about 400 full-time equivalent positions, down from over 600 prior to the mine's temporary closure.
The agreement's tenure sees plans to optimize mining operations by reducing transportation distances and bolstering metal output. Initially, the annual production is projected to touch 1.8 million tonnes. Alongside this, the company anticipates an organizational redesign, a staff reduction, and better work approaches.
The Tara mine's regular cash cost is predicted to decline to approximately 100 US cents per pound of Zinc, a drop from 137 US cents in the first half of 2023. Aside including improved energy price projections, the reasons for this reduction also include lower benchmark treatment charges and heightened productivity levels.
The decision to reopen the Tara mine ties in with the resumption of exploration activities related to the Tara Deep deposit, set to commence in the second half of 2024.
Boliden's shares are currently being traded in Stockholm at 364 Swedish Krona, marking a 2.5% increase.
