CANCUN, Mexico The zinc
concentrates market is a lot tighter than it seems due to
quality differences and logistical problems, an executive at
Peruvian mining company Volcan Cia. Minera SAA told
"People are talking about piles
of concentrates in China, but ... what kinds of concentrates
are those? Some of the concentrates, because of quality, cannot
go straight to smelters," Volcan commercial manager Paolo
Cabrejos Martin said. "Theres a big regional difference
between concentrates, and quality is a big issue right
Mining companies typically blend
concentrates to filter out materials that smelters dont
want, such as arsenic and bismuth. "The typical recoveries have
changed as deposits have become more complicated, and offtakers
are complaining at the slightest move in quality away from the
average," he said.
"Concentrates are not a
homogeneous material like metal; theyre different in
terms of grades, regions and smelter needs, so you cant
really have a number that represents the whole industry,"
according to Martin, stressing the need for multiple
Teck Resources Ltd., Vancouver,
British Columbia, and Korea Zinc Co. Ltd., Seoul, South Korea,
last week agreed to a treatment charge (TC) of $210.10 per
tonne, based on a zinc price of $2,000 per tonne (
amm.com, Feb. 27). While traditionally viewed as
the industry benchmark, some companies are resisting locking
into deals at the same price level.
"If youre going to have a
benchmark, why not an Asian benchmark, a European benchmark and
a South American benchmark? I think there should be more than
one, as the concentrates market is not as simple as many people
see it; having just one TC benchmark price is a tradition, and
while the Teck-Korea Zinc business is understandably important,
I dont think its representative of the whole
world," he told AMM.
Logistics is another factor
complicating visibility into the availability of concentrates,
particularly in Peru, which ships the raw material through the
port of Callao, west of Lima.
"Callao port is a mess right
now," Martin said, pointing to long warehouse delays, a lack of
storage space and an inability to handle the vessels. With
seven to 10 days worth of vessels lining up, "thats more
than 100,000 tonnes ... that has already been sold and is ready
to go but cant leave Peru because of the congestion.
Its not that concentrates are piling up in surplus,
theres just a huge warehouse and port bottleneck to get
The congestion is only going to
get worse, as shipments to China are set to rise sharply over
the next couple of years, he said.
The tightness in the Peruvian
market right now will increase once the recently restarted La
Oroya complex gets back to full capacity, Martin said.
But the likelihood of future
output cuts on the mining side means the companys outlook
on zinc is extremely optimistic, he said.
"Mine-side production cuts are
coming, and I think what you see on paper with projects
isnt what will happen in reality, given various
environmental, social, political, logistical and cost issues,"