Shutdown of Europe's largest zinc mine heightens market supply concerns

On Wednesday, Boliden, a Swedish mining company, said it had stopped production at its Tara zinc mine in Ireland due to an accident during operations. LME zinc prices rose 2.2 per cent to $3420 a tonne after news of the Tara shutdown.

It is reported that while Boliden staff were drilling holes in the ventilation shaft, water began to pour into the underground mine, exceeding the capacity of the drainage infrastructure. According to Boliden, it is not clear how long the Tara zinc mine will stop production.

As the largest zinc mine in Europe, the Tara zinc mine produced 127000 tons of zinc concentrate and 14000 tons of lead concentrate in 2020. With the shutdown of the Tara zinc mine, the market, which is already mired in supply worries, faces a worse situation.

Commodity giant Glencore announced this week that it would close its important production line, Portovesme, in Italy. Affected by the news, zinc prices continued to strengthen, once the biggest increase in a month.

Data show that Portovesme can produce 100000 tons of zinc sulfide per year. Glencore revealed that Portovesme will carry out maintenance and maintenance before the end of the year.

Europe's heavy industries, from steel to fertiliser, are under pressure from soaring prices of natural gas and electricity, as well as zinc production. Trafigura, Nyrstar and Glencore have announced production cuts, causing zinc prices to rise 13% in October.

Glencore said it would continue to evaluate production cuts in the context of the European energy market.

Research firm Fitch Solutions (Fitch Solutions) forecasts the evaluated price of zinc at $2600 a tonne in 2021. Fitch pointed out in a recent report that the global overproduction in 2020 should continue into the medium term, and the resulting increase in zinc stocks will gradually drive down prices.

According to estimates, global zinc production this year is about 14 million tons.