Canadian miner Teck Resources has negotiated a significant drop in the processing fee it will pay Korea Zinc to convert concentrate from its Red Dog mine in Alaska. The annual treatment charge (TC) for 2024 has plunged by almost 40% compared to last year, reflecting the challenges faced by the zinc market.
A concentrate deficit has been looming over the zinc industry since the second half of 2023, as several mines globally have cut production or temporarily shut down due to low profits amid falling zinc prices. Market sources predict that more mine closures could be on the horizon, maintaining tight market conditions.
The decrease in TCs is in line with market expectations, but still represents a record low compared to previous years. Analysts believe the drop is a clear indication of the tight conditions in the zinc concentrate market following the suspension of uneconomical mines in recent years.
With the LME zinc price currently hovering around $2,478.50 per tonne, many miners are struggling to break even. Inflationary pressures and low metal prices are creating challenges for mining operations, leading some to question the long-term viability of certain mines.
Despite the current tightness in the market, there is optimism that new mine capacities in regions like Bosnia, Mexico, and the DRC could improve availability in the coming months. For now, industry participants are bracing for a challenging first half of the year, as the zinc market continues to navigate through uncertain times.
