Zinc concentrate Talks ...
Monday January 11, 3:20 pm Eastern Time
Zinc concentrate talks resume, no settlements yet
By Catherine Tymkiw
NEW YORK, Jan 11 (Reuters) - Treatment charge (TC) negotiations between miners and
smelters for processing zinc concentrates into metal are set to continue in Europe for the next
couple of weeks, according to miners.
''We're not any closer,'' said one miner. But that is mostly due to a lack of meetings since before the Christmas holiday, he
acknowledged.
''It's hard to say what is going to happen. We're really not that far apart but it's a long way for us to move,'' said a miner.
''We're losing our shirts at these prices,'' he added.
The London Metal Exchange three-month zinc price was $952 per tonne during kerb trading Monday but was able to close
firmer at $957 a tonne. ''At these prices, most zinc producers are probably losing money,'' suggested a trader. LME stocks
were down 450 tonnes to 315,675 tonnes.
''Prices are too low and its hurting certainly everybody, the smelters and the mines,'' said an industry source.
In 1998, the benchmark TC was settled at $185-187.50 per tonne, basis an LME cash price of $1,100 a tonne. Australia's
Pasminco was the first to secure a settlement, albeit at higher terms ($191 a tonne).
Miners discounted that deal as a benchmark, calling Pasminco a net smelter. Subsquently, talks dragged on into late May.
Current negotiations have been more amicable with both sides holding some hope of concluding deals before the annual
American Zinc Association meeting in late February, although some were less optimistic. ''I can't see any breakthrough at the
moment,'' said a miner.
The fate of Italian engery group ENI's Pertusola Sud zinc smelter in Crotone unknown and Japanese smelter Mitsui Mining &
Smelting Co Ltd said it was considering production cuts.
The Crotone smelter has been operating at a reduced rate of 70,000 tonnes per year versus its nameplate capacity of 100,000
tonnes per year.
Mitsui said it was considering a cutback due to slack domestic demand and the strength of the yen against the dollar. A
decision would not be made before April.
''I think it's probably because of a shortage of concentrates,'' speculated a miner. ''Very seldom smelters cut back when prices
are low. They try and produce more when prices are below unit cost,'' he added.
Japanese smelters were still said to be looking for improved TCs for the 1999 season, despite production cuts, because of new
mining projects set to come on stream by the end of the year, according to a Japanese official.
''I guess what they think is that because they cut production there will be more concentrates available to the market, ones they
are not consuming. But it doesn't work like that. Everyone (miners) is sold out and struggling at these prices,'' stated a miner.
Low zinc prices have played a featured role in talks with miners feeling the brunt of the weak price since smelters can more
readily hedge their price by buying concentrate and correspondingly selling metal.
Premiums in North America for special high grade zinc metal are quoted at 4.75 cents per lb. ''Things are better than they were
last week. Demand is at a good level,'' said one trader.
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