Draslovka Holding a.s., a Czech-based, global leader in cyanide-based chemical specialties and agricultural chemicals including next generation fumigants and biocides, has temporarily reduced production of sodium cyanide (NaCN) to a minimum level at its facility in Kolín, Czech Republic. This decision comes in response to the unprecedented spike in input costs experienced following the invasion of Ukraine by the Russian Federation. The invasion in Ukraine exacerbated a market situation where prices were already near historic highs.
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NaCN production costs in Europe have almost trebled in 2022 due to the impact that the invasion and subsequent global trade sanctions has had on the prices of the energy and materials used – such as natural gas and ammonia – in the Company’s production processes. This increase, which is also exacerbated by ever-increasing shipping costs, has made the manufacture of NaCN temporarily uneconomical given the current spot prices.
Draslovka‘s European production facilities in Kolín, therefore, are re-focusing on other Draslovka products that are less affected by the recent energy volatility or whose prices have increased proportionally to this unprecedented increase in production cost. The products include KCN, DPG, Chelates and other chemical specialties.
The seamless supply of NaCN to the Company’s customers remains a key priority. Draslovka Mining Solutions plant in Memphis, America’s largest sodium cyanide production facility, is unaffected by this decision, and will be fully utilized to ensure the ongoing seamless supply to Draslovka’s customers. Due to the flexibility of Draslovka’s European production portfolio, the Company expects a relatively small financial impact of the decision on the business as a whole. There will be no redundancies at the Kolín plant as a result of this decision.
Pavel Brůžek, CEO of Draslovka, said:
“Spiking gas and raw materials prices, ever-increasing shipping costs and the economic isolation of the Russian Federation exaggerate the long-term market dynamics at play, making the manufacture of NaCN in Europe temporarily uneconomical with the current spot prices not currently covering the variable costs of NaCN production in EU.
I would like to personally reiterate that despite the developments outlined, seamless supply remains an absolutely core element of our commitment to our customers. Draslovka recognizes the mining industry’s critical need for a reliable supply of sodium cyanide and we will continue working diligently to support our customers’ operations. We have a number of tools at our disposal to do so, including the Americas’ largest production facility and most robust distribution network.”