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21 March 2012 | Adam Leach
Hochschild Mining reported a 69 per cent increase in operating profit as average silver prices for the year jumped by 53 per cent.
In annual results published yesterday, the company - which operates mines in Peru and Argentina, among other places - revealed silver production fell from 17.77 million ounces in 2010 to 14.98 million ounces this year. But due to the significant price increase, revenue from the precious metal increased by 37 per cent to $755.8 million (£476 million) for the year.
Despite coming out on top, the company cautioned over the volatile situation within the precious metals market. Executive chairman Eduardo Hochschild said: “Precious metals markets’ volatility became a more prominent feature in 2011 than ever before, with silver in particular displaying very large swings in price.
“The high of almost $50 per ounce was reached in May with investment demand becoming the main driver, but by December, silver prices had fallen by some 44 per cent to below $30 per ounce again.”
Silver is bought by companies in a range of industries. Silver nitrate and silver halides is used in the photographic industry. It is also used in electrical wires and certain types of batteries. A silver-based polymer is even used in the production of socks to prevent the spread of bacteria.
The company also benefited from higher gold prices, although not to the same degree. Gold revenues increased by 14 per cent to $287 million (£180 million) for the year, again despite lower production, falling to 127,000 ounces from 144,000 ounces in 2010.
In January, the International Monetary Fund forecast an easing in the global commodities market. Its outlook suggested greater supply accompanied by a reduction in demand globally would force the average market prices paid for the raw materials to drop in all categories, apart from oil.