Portugal’s mining strategy may favour copper over lithium
Portugal already has the largest copper mine in the European Union, operated by Lundin Mining.
The zinc price touched a near 14-year high in Shanghai on Wednesday, while in London it jumped to the strongest in over three-and-a-half years after Nyrstar said it will cut production by up to 50% at its three European zinc smelters due to the soaring price of electricity.
The most-traded November zinc contract on the Shanghai Futures Exchange closed up 1.5% at 24,000 yuan ($3,721.68) a tonne, its highest since November 2007. Benchmark zinc on the LME had gained 3.3% to $3,372.50 a tonne by 09:30 GMT, the strongest since March 2018.
Click here for an interactive chart of zinc prices
“The cost burden of carbon emitted by the electricity sector which is passed on to industrial and domestic customers, means it is no longer economically feasible to operate the plants at full capacity,” Nyrstar said.
“Indirect cost compensation for energy-intensive producers to protect their competitiveness versus non-EU producers varies by European country and this puts Nyrstar’s Budel, Balen and Auby plants at a competitive disadvantage, compounding the impact of extreme energy prices.”
The firm is the world’s second largest zinc producer and one of the biggest zinc smelting companies. It has operations across northern Europe, the United States and Australia.
Nyrstar did not say how much zinc production would be lost or provide the production capacity of the three smelters.
Electricity prices have surged to record highs in recent weeks, driven by power shortages in Asia and Europe.
“Chinese (zinc) smelters have cut production for several times in the past months, and we have revised down the production forecast by 80,000 tonnes compared with our previous forecast in early 2021,” said CRU analyst Dina Yu in Beijing.
According to the International Lead and Zinc Study Group, the global zinc market will be slightly over-supplied this year and next.
Fitch Solutions forecasts an average zinc price of $2,600 per tonne in 2021.
“The global production surplus that emerged in 2020 should persist into the medium term, and the resulting increase of zinc inventories should gradually drag prices lower,” said the research firm in a recent report.
(With files from Reuters)
