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 told AMM.
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 confirmed.
Earlier this week, a level of $209 per tonne was said by market sources to be the focus of negotiations (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 basis price.
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 above that.
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.