Nyrstar to suspend operations at two U.S. zinc mines (updated)

Nyrstar NV

01/11/2023 14:49

(Adds analyst comment, background)
    By Eric Onstad
       LONDON, Nov 1 (Reuters) - Nyrstar said it plans to
temporarily close two zinc mines in the U.S. state of Tennessee
at the end of November due to weak prices and the impact of
inflation, a third shutdown of zinc operations by producers in
recent months.
    Netherlands-based Nyrstar, which is wholly owned by trading
and logistics company Trafigura, said in a statement it will
"temporarily pause production operations" on Nov. 30 at its
Middle Tennessee Mines.
    That operation consists of two underground zinc mines,
Gordonsville and Cumberland, according to Nyrstar's website.
    Nyrstar does not disclose production data for individual
mine operations, but the Middle Tennessee processing plant has a
capacity of 3 million metric tons of ore and 50,000 tons of zinc
concentrates annually, a spokesperson said.
    Other Nyrstar operations in the state, the East Tennessee
Mines, are still open. That processing plant has a capacity of
110,000 tons of concentrates a year.
    The closures, along with shutdowns in Ireland and Portugal
by other producers, will reduce an expected zinc market surplus
for 2024, Morgan Stanley analysts said in a note.
    "However, with most zinc used to galvinise steel, which
faces demand challenges from weak construction activity, we
would still see surpluses. In our view, a stronger demand
recovery is needed for a more sustained rally." 
    Zinc prices  CMZN3  on the London Metal Exchange have
slumped 16% so far this year, but spiked as much as 7% to a
one-month high on Wednesday before paring gains to trade up 3.2%
at $2,509 a metric ton.
    During the suspension, Nyrstar will conduct drilling
operations to find additional zinc, germanium and gallium
resources, it added.
    In July, Nyrstar said it was looking at germanium and
gallium projects in Australia, Europe and the U.S., which could
help ease any shortages created by China's export controls on
the materials used for computer chips.

 (Reporting by Eric Onstad; Editing by David Evans and Jan
Harvey)
 ((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO;
 Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))