Umicore shares jump as refiner sells gold to cash in on rally

Umicore SA shares surged as much as 8% after the Belgian recycling and metals refining company said it will generate €410 million ($477 million) in cash from selling its gold inventories.

The metals refiner is cashing in on gold’s record breaking rally to above $4,000 an ounce for the first time. Bullion traded below $2,000 just two years ago, but uncertainties over global trade, the Federal Reserve’s independence and US fiscal stability are driving the precious metal higher.

The Belgian firm is shifting to borrowing gold for its refining operations instead of owning it, reducing its working capital needs and exposure to price swings. Lease rates will be more than offset by reduced financing costs, Umicore said in a statement on Wednesday.

The move underscores how industrial users of precious metals are monetizing inventories to take advantage of record prices. Umicore said the gold sale will generate a one-time boost of €480 million to earnings before interest, taxes, depreciation and amortization.

Umicore was trading 5.1% higher at 10:42 a.m. in Brussels, bringing this year’s gain to 63%.

Lease rates reflect the return that holders of bullion in London’s vaults can get by loaning their metal out to other buyers on a short-term basis. Normally, the costs sit close to zero, making leasing metal an attractive option for refiners, rather than holding working capital in gold. But earlier this year borrowing costs spiked to a record, as traders sought to get their hands on bullion to fly it to the US and capture an arbitrage opportunity driven by tariff fears.

(By S’thembile Cele)