CANCUN, Mexico Teck
Resources Ltd. and Korea Zinc Co. Ltd. have settled a benchmark
zinc treatment charge (TC) at $210.50 per tonne, swinging terms
in favor of the smelters for the coming year, industry sources
The benchmark is based on a zinc
price of $2,000 per tonne.
Last year, the zinc TC settled
between the two companies at $191 per tonne, also based on a
$2,000-per-tonne zinc price.
Neither Teck nor Korea Zinc have
confirmed the benchmark, which they have been negotiating
during the International Zinc Association conference in Cancun,
Mexico, this week.
The higher benchmark reflects a
looser market for zinc concentrates, also evidenced in higher
spot TCs recently.
Other miners and smelters
attending the conference are expected to settle contracts on
similar terms once the Teck-Korea Zinc benchmark is
Earlier this week, a level of
$209 per tonne was said by market sources to be the focus of
amm.com, Feb. 25).
The deal is also said to include
de-escalator and escalator conditions, under which the base TC
would change by an agreed percentage, according to fluctuations
in the London Metal Exchange zinc price above or below the
Two industry sources suggested
the companies have agreed to escalators in steps: 6 percent up
to $2,500, 3 percent up to $3,000 and 2 percent for prices
This would imply companies
expect volatile but higher zinc prices.
But there is still little
clarity on these price participation clauses.
Another source said the
companies have agreed on an escalator of 5 percent and a
de-escalator of 3 percent.