Nyrstar to Buy Zinc Concentrate from Talvivaara

BRUSSELS, Jan. 25 -- Belgium's Nyrstar (NYR.BR: Quote), the world's biggest producer of zinc, has agreed to buy 1.25 million tonnes of zinc in concentrate from Finland's Talvivaara (TALV.L: Quote) to increase its self-sufficiency in raw material.

Nyrstar said in a statement on Monday that it had agreed to buy the 65 percent grade concentrate for $335 million. The first delivery is expected in February, ramping up to 90,000 tonnes a year from 2012 and with supplies to run over the next 10 to 15 years.

"This agreement is an innovative approach to the continued execution of our strategy. Whilst we will not own or operate the Talvivaara Sotkamo mine we will participate in the economic benefits," said Chief Executive Roland Junck.

"We continue to actively explore additional opportunities to deliver on our strategy," he added.

The Belgian company, which has bought a zinc mine in Tennessee since announcing plans to expand into mining in June, will also pay Talvivaara an extraction and processing fee of 350 euros ($494.5) per tonne of zinc in concentrate delivered.

It would also make additional payments if the zinc price rose beyond $2,500 per tonne in the initial years of the contract.

Nyrstar will also supply Talvivaara with up to 150,000 tonnes of sulphuric acid per year for use in the zinc leaching process.

The deal is expected to be completed, with payment of the purchase price, on or about January 29.

Nyrstar is the world's biggest producer of zinc, churning out over 1 million tonnes a year, more than nearest rivals Korea Zinc 01030.KS and Xstrata (XTA.L: Quote).