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Photo = Youngpoong |
[Alpha Biz= Kim Jisun] Youngpoong Seokpo Smelter will suspend operations for 58 days starting this week due to administrative sanctions imposed by environmental authorities. During this period, all production activities, including zinc ingot manufacturing, will be halted, inevitably impacting the company’s performance this year.
According to industry sources on Monday, Youngpoong Seokpo Smelter will cease operations from February 26. In December last year, the Ministry of Environment and North Gyeongsang Province ordered a 58-day suspension from February 26 to April 24, 2025. During this period, the smelter will be prohibited from conducting any production activities, including processing zinc concentrates into zinc ingots.
The suspension was enforced after South Korea’s Supreme Court ruled against the smelter in a case dating back to 2019, in which it was found guilty of violating the Water Environment Conservation Act. The penalties stem from illegal activities, including unauthorized wastewater discharge and the installation of unlicensed pipelines.
With the suspension and the additional time required for restarting operations, industry observers expect nearly four months of production disruptions. As a result, Youngpoong’s smelting division is likely to experience a further decline in revenue. Between January and September 2024, the company’s smelting division recorded sales of KRW 818.7 billion, a 31.5% (KRW 376.2 billion) drop from KRW 1.1949 trillion in the same period of 2023. This year, sales in the division are expected to fall even further.
Analysts warn that the zinc ingot production, a core part of the smelter’s operations, will suffer a severe blow. Youngpoong’s zinc ingot revenue has been on a sharp decline, shrinking from KRW 1.1419 trillion in 2022 to KRW 966 billion in 2023, and further down to KRW 639.2 billion in 2024. This represents a 44% (KRW 502.7 billion) decline in just two years.
With declining core business revenue, profitability is expected to deteriorate. According to financial disclosures from the Financial Supervisory Service, Youngpoong recorded an operating loss of KRW 162.2 billion and a net loss of KRW 263.3 billion in 2024, marking the largest loss since the company’s public disclosure history began in 1999.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
