LONDON Korea Zinc Co. Ltd. is underperforming against production targets for zinc, lead, silver and indium due to seasonal power issues and a sustained shortfall in concentrates from South America, industry observers told AMM sister publication Metal Bulletin.
"Those two issues have influenced Korea Zincs output, and they may persist throughout the year so we must keep our eyes on them," a source familiar with the situation said.
The custom smelting groups lead production is believed to be down about 10 percent against annual targets, while silver output is between 25 and 33 percent short, an analyst told Metal Bulletin.
South Koreas energy ministry warned of rolling blackouts in August after six of the countrys 23 nuclear reactors were brought offline and warmer summer temperatures caused a spike in electricity usage.
A decline in silver- and indium-rich lead and zinc concentrates from Bolivia and high-silver zinc feed from Peru over the summer months further hurt production, market sources said.
Korea Zinc declined to comment.
The shortfall comes as Baar, Switzerland-based Glencore Xstrata Plc has moved more South American material to the Portovesme smelter in Italy and the La Oroya smelter in Peru, both of which restarted earlier this year, sources said.
The reopening of the polymetallic plants, which are optimized to treat complex concentrates such as those from Bolivia and Peru, has led to a sharp jump in the value of those feeds, as reflected in a recent drop in high-silver lead treatment and refining charges.
While its overall lead and zinc production was up, Glencore also reported "modest declines" in production at its Sinchi Wayra mines in Bolivia and the Los Quenuales deposits in Peru over the first half of the year due to factors including an expected decline in head grades, which may have further affected concentrates availability.
The opening round of discussions for zinc and lead concentrates supply contracts in 2014 are taking place this week at the International Lead and Zinc Study Group conference in Lisbon.
A version of this article was first published by AMM sister publication Metal Bulletin.