Zinc producer Nexa expects high prices as Europe smelters shut
13/10/2022 17:10
*
Nexa looking to acquire a new mine in North or South
America
By Marcelo Teixeira
NEW YORK, Oct 13 (Reuters) - South American zinc and
copper producer Nexa Resources SA NEXA.N expects tight
supplies of zinc metals globally due to smelter closures in
Europe as energy prices skyrocket, a situation that is boosting
overall price premiums.
Nexa's Chief Executive Ignacio Rosado told Reuters on
Thursday, ahead of a meeting with investors at the New York
Stock Exchange (NYSE), that the European situation is opening
opportunities to expand zinc sales in the continent at higher
prices.
"Smelters in Europe, and also in the United States, are
stopping production due to the high price of energy, so there is
not much (zinc) metal," Rosado said, adding that the situation
is more than offsetting the negative aspect of a possible global
recession.
"So, as a producer based in South America that uses a large
share of electricity from hydro plants, it is a good moment to
be in the business," he said.
Zinc is mostly used to make stainless steel, and in general
as an anticorrosion product.
NYSE-listed Nexa is 65% owned by the Votorantim family in
Brazil. Peruvian funds hold another 16%, with the rest trading
in the market.
Rosado said the company, which owns mines and smelters in
Peru and Brazil and is the fifth largest global zinc producer,
is in talks to buy a new zinc and copper mine to expand
production.
He declined to name potential targets, but said the
investment in the new asset would be around $800 million to $1
billion and the location could be in Peru, Brazil, Chile, Mexico
or the United States.
The executive said the company would most likely use its own
cash and debt to pay for the new mine, rather than raising
capital through new shares, despite that being an option
particularly due to the need to expand liquidity for its stock.
(Reporting by Marcelo Teixeira in New York; Editing by Josie
Kao)
((marcelo.teixeira@tr.com; +1 332 220 8062; Reuters Messaging:
marcelo.teixeira.thomsonreuters.com@reuters.net - https://twitter.com/tx_marcelo))