Johnson Matthey to Sell Precious Metal Refineries on Subdued Prices

Subdued precious metal prices maybe be great for physical investors but not for refiners.

Bullion.Directory precious metals analysis 16 December, 2014
By Christopher Lemieux
Senior FX and Commodities Analyst at FX Analytics

The definition of you’re a bad person on Earth is you go to hell and run a gold mine

Kevin O’Leary, O’Leary Funds

Johnson Matthey produced fine bullion products that demanded high premiums. Well, they did. In an effort to consolidate its core business, Johnson Matthey will sell their gold and silver refineries to Asahi Holdings for £118 million. Although well-known for its refined gold and silver, Johnson Matthey will now focus on its core chemical and technology operations, according to the Financial Times.

This is just another case of businesses looking to consolidate and axe gold and silver production amid subdued prices. Refiners have had to do quite a bit of financial engineering over the last three years, as most refiners expected the price of gold to ever-increase. Miners were looking at cash hemorrhaging as production costs were higher that precious metal market prices. Those refiners that were able to keep debt in control have had much more success than those that have not, such as the world’s largest gold producer Barrick (ABX). Matthey had reported a 23 percent decline in six-month sales for its gold and silver refineries. That’s odd, the US Mint and Royal Canadian Mint have no issues selling product.

Matthey will keep its platinum refineries as a play on manufacturing. The majority of Johnson Matthey’s business is sales in catalytic converters made of platinum and palladium.

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