As Q1 approaches its end, what is the resumption pace of domestic lead-zinc mines? [SMM Analysis]

SMM March 26 News:

According to SMM, the year-end and the beginning of the year are the conventional maintenance and shutdown periods for domestic lead-zinc mines. Affected by holidays and maintenance, overall production dropped to a low level at the year-end. With Q2 approaching, some previously shut down mines in the north have gradually resumed operations. What is the current overall resumption pace? How does the rapid rebound in domestic and international processing fees impact the production schedule of miners this year？

I. Miners with routine Chinese New Year break maintenance have basically fully resumed

During the Chinese New Year, mines in multiple provinces experienced routine holiday breaks or maintenance shutdowns. According to SMM, the overall shutdown duration ranged from 15 to 30 days, significantly impacting domestic zinc ore production. Subsequently, these mines began to resume operations around the Lantern Festival, and after a period of operation, overall production has largely returned to pre-holiday levels, with the resumption pace meeting previous expectations.

II. Peak resumption period for northern mines approaches

In Q1, some previously shut down mines in northern China also began to resume production. Based on SMM's communication, mines in Qinghai, Tibet, and Inner Mongolia typically shut down from November to May of the following year. Currently, as Q1 nears its end, some miners expected to resume production in March have successfully restored output, while other mines yet to start have maintained their previously expected resumption timelines. Overall, the resumption progress is smooth, and the peak period for production recovery is approaching.

III. Domestic miners' production schedule for this year

From the production schedule perspective, the main increments in domestic mines this year come from two aspects: first, some mines that were put into operation last year continue to ramp up production this year, with the primary increment coming from the domestic Huoshaoyun mine; second, some mines have completed infrastructure construction and are planned to start operations this year, expected to bring certain increments. Additionally, for other domestic mines, although the rapid rebound in processing fees has led to a noticeable pullback in miners' profits, the overall level remains considerable, and the production enthusiasm of mines remains strong, with this year's production plan showing relatively small changes QoQ.

In summary, with the resumption of domestic miners and the ramp-up of some mines, domestic zinc ore production is gradually recovering, expected to reach the annual production peak in Q3, with an overall production increment of around 100,000 mt.