Silver surge puts smile on Polish mine investors’ faces

With silver prices up 36 pct since the beginning of 2020 and demand for its copper up due to problems with supply from South American rivals, the share price of Poland’s copper giant soared on Monday on the Warsaw stock exchange, to fall back slightly today.

Silver prices have soared in the wake of increased interest in gold from investors this year. On Monday the price of an ounce of silver rose to USD 24.63 before falling back 4% to 23.74 at Warsaw time. This is the highest price since 2013.

Gold and silver are seen as “safe havens” for investors, who often face negative returns on deposits in real terms, with low interest rates and higher inflation.

Ores of the precious metals are mined along with copper deposits in KGHM’s mines in southwest Poland, though its gold production is minimal.

Meanwhile, “about 12% of KGHM’s revenue is generated by the sale of silver,” which, according to the company’s website is smelted at its Głogów plant. About 40 percent of the global production goes to industrial uses and 45 percent goes into jewellery manufacture.

In 2019, KGHM produced approx. 1400 tonnes of silver, making the Company one of the world’s leading producers of silver. In the first half of 2020 production fell by 4.2 tonnes to 707.5 tonnes, but with the higher price, silver revenues will be up.

The company’s stock price leapfrogged insurer PZU and oil firm Orlen but did not overtake CD Projekt, the games developer, which surpassed KGHM’s value in 2018 in the wake of sales of its Witcher 3 games and news of Cyberpunk 2077's development.

Nevertheless, the share price jumped over 6.5 percent on Monday, falling back by just over 2 percent on Tuesday, giving the company a market capital of PLN 26.5 bn (EUR 6 bn) making it the fourth biggest company after CD Project, PGNiG and PKO Bank Polski.

It was not only the price of silver that played a part in the growing investor interest in the company. Copper prices are now 4 percent higher than at the beginning of the year, according to Businessinsider.