SLUMP IN METALS.

Dominion, Volume 1, Issue 283, 24 August 1908, Page 7

SLUMP IN METALS.

BROKEN HILL PROPRIETARY. (BY TELEGRAPH—MESS ASSOCIATION' —COPYRIGHT.) Sydney, August 22. The report to bo presented at tlie halfyearly meeting of tllo Broken Hill Proprietary Company shows that tho depreciation in silver and lead has roduced tho profits from £137,462 to £22,776, which is equivalent to a fall in profits on a ton of ore from Bs. 9d. to Is. 8(1. WHAT THE SLUMP MEANS AT BROKEN HILL. THE STANDARD OP WAGES. In April it was announced that the Broken Hill Proprietary Company would not pay the usual quarterly dividend. The reasons given were the low prices of metals, and higher working costs. Tho Company's decision came as a shook to Broken .Hill, whero it was believed, in somo quarters, that the reasons given were only half the truth, and that,tho Company was preparing either for a further slump in the prices of inetals or for a conflict with' labour over reduction of wages. "This announcement (says tho "Argus" of Thursday, July 30) only partially states the case, because while it is true that tho price of metals is. unsatisfactory, still costs are high. This arises from the concession made to the employees of tho Barrier mining companies of an increase of 121 per cent, in wages. While lead was at JEU and silver at 2s. sd. per ounce, the larger pay-sheet could bo easily met. But with lead down below <£13 and 6ilver at about 2s. per ounce, and with the industry penalised by the extra costs involved by tho higher import- duties on many articles used by the mines, profits were bound to shrink to very small figures. Taking the'output of lead of the Proprietary at about 60,000 tons per annum, the extra charge arising from tho increaso in wages.meant an addition to the cost of producing lead of about 30s. per ton, or, roughly, a total of ,£75,000 per annum. The, large establishment kept up by the Proprietary not only at the Barrier, but at the smelting works nt Pori Pirie, and at the coke and flux works, accounts for the extra wages amounting to such a large sum. ■ "The advance in the prico of coal of 3s. per ton.would also mean another increase of probably ..£15,000 for the year. All tho 'companies are affected similarly in these directions, but the magnitude of tho operations of the Proprietary causes the burden to fall heaviest on it. Tho profit shown by the Company for tho six months is probably tho smallest that has yet appeared in its. half-yearly statements. Going back to iOOI the Company only netted ,£•13,318, the average price realised for its lead then being ,£ll 10s. lOd, per ton. But, as stated, tho cost of labour was then very much less, and mining, owing to the larger formations available, and tho shallower depths at which mining was carried on, was in itself less .expensive. The following table gives all net'profits earned since May, 1901, when load started to fall, until it dropped to below .£lO, the dividends paid, and the price per ton of lead realised:— Net _ Lead, Profits. Dividends. Per Ton. Year. £ £ X s, d. May, 1901 87,579 120,000 13 2 9 Nov., 1901 43,318 48,000 11 10 10 May, 1902 47,911 48,000 10 9 7 Nov., 1902 54,755 43,000 9 17 0 May, 1903 57,061 48,000 10 11 2 Nov., 1903 72,083 48,000 9 19 10 May, 1901 107,098 120,000 10 6 1 Nov., 1904 ...... 136,261 96,000 10 14 0 May, 1905 147,671 141,000 11 6 4 Nov., 1905 196,959 144,000 12i 10 6 May, 1906 252,332 192,000 14 18 0 Nov., 1906 314,284 240,000 1G 5 5 May, 1907 308,238 24,0,000 18 6 5 Nov. 30, 1907 ... 137,642 ' 288,000 16 4 D May, lOC'S 22,750 - -

The above. cablegram means that the Company's half-yearly dividend (for the half-year ended Jlay 31) is also to bo omitted. Substantially tho same fact was contained in tho' following cablegram sent to London last month by the Company's directors: "Tho directors regret to announce that the figures just available for tho half-year ended May 31, 1908, show a profit of only ,£22,750, duo to the unsatisfactory prico of metals; in consequence tho directors, at tho meeting held to-day, have decided that they are unable to declare ' any dividend." The price of lead between November 30, 1907, and May 31, 1908, dropped from .£ls 15s. per ton to under ,£l3 per ton. It will bo noticed that tho Company never failed to pay a dividend during the time that it was obtaining under 4110 per ton for lead, but, as pointed out, ,£lO then was equal to ill 10s. undor present conditions. "The last divedond paid by tho Company was of Is. 6d. per share, and was announced at the end of January, 1903. The previous dividend was of 3s. per share, and was declared in October, 1907, when lead stood at above ,£lB por ton. Tho share markot yesterday (Wednesday, July 29) apparently failed to realise what was in the wind, for the Company's shares in the morning stood at above tho price reached on Tuesday. Late in the evening, however, prices weakened. The South Broken Hill Company also lias not declared a dividend so far, although tho date 1 on which tho announcement is usually made has been passed. ■ As the Company is in the same position as the Broken Hill Proprietary Company, and has been working only two shifts, the prospcct of a dividend is not regarded favourably. Tho foregoing table indicates how the profits of Barrier companies are affected by the changes in the metal market. Thus, within 12 months, the Proprietary profits have fallen from .£303,238 for the six months to .£22,750. The accounts of tho Company will not bo available for some little time. Those for the last half-year showed a surplus of of liquid assets, including reserve fund investments .4260,000 and cash balance ,£45,000."