[SMM translator] Nyrstar, one of the world's largest zinc smelters, faces restructuring under heavy debt burden

SMM11 14 -: Nyrstar NV is one of the world's largest zinc smelters, but its huge debt pressure has recently had some impact on the company. The company's shares hit a new low on Tuesday, with bonds maturing next year now trading at 50 cents against the euro. Analysts say the company is heading for an inevitable restructuring and its share price will soon shrink sharply.

Many of the company's newly acquired mines have not lived up to their promises, and Nyrstar has been forced to write down values or sell at a loss. Nyrstar's main business is to buy ore and smelt it into metals. In recent years, the cost of zinc ore has soared and the company's profits have been hampered.

Between 2015 and 2018, the cost of ore processing, an industry indicator of profitability, fell by 40 per cent, leading to a drop in smelting profits. On-site processing costs are starting to rise, which means business is likely to improve next year. Nyrstar currently buys most of its raw materials in annual trading and is priced at a multi-year low.

Zinc prices are down 24% this year, making it difficult for the zinc industry to make a profit. While other smelters are under the same pressure, Nyrstar's woes are all the more pronounced because of its debt. Analysts have sounded the alarm about Nyrstar's years of debt, but the situation is getting worse. The market is sceptical about whether the company, which matures 340 million euros ($383 million) in bonds in September, will be able to repay it.

More importantly, the core smelting business lost money in the third quarter. Nyrstar also plans to temporarily close some of its factories in Australia because of excessive lead emissions.

Analysts said the company's debt needed to be restructured and its stake could be erased. A Nystar spokeswoman did not immediately return phone calls or emails for comment.

The key to NV's view of the status quo of Nyrstar is whether Trafigua will save Nyrstar.

The exchange is its largest customer, supplier and shareholder, with a 25 per cent stake. As part of the acquisition agreement, the company also made advances to Nyrstar and provided the company with $250 million in working capital facilities.

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