Nyrstar, Glencore Look To Peru Zinc Mines As Prices Rise

LIMA, June 2 -- Interest in Peruvian zinc mines is picking up as prices for the commodity recover from last year's lows. A source close to world's biggest zinc producer, Belgium's Nyrstar SA (NYR.BT), said this week the company could consider "additional opportunities" in the Andean country, while Swiss-based Glencore International AG (GNC.YY) has reopened its suspended Iscaycruz mine.

Peru is the world's second largest zinc producer, according to the Ministry for Energy and Mining, and in 2008 Iscaycruz accounted for about 11% of national production, said Scotiabank's mining analyst Juan Pablo Ramos on Wednesday.

Following a sharp drop in zinc prices in 2009, to about $0.40 a pound, due partly to oversupply and partly to the effects of the global financial crisis, many zinc projects were suspended, Ramos said.

"Prices now are more like $0.70 or $0.80 per pound, so operations are more profitable again," Ramos said. Margins are not big, he added, but producers are likely to be hoping that prices will continue upward into 2011, if there is a stable recovery in global manufacturing and better demand for cars and durable goods.

Nyrstar's interest in additional operations in Peru follows its purchase of an 85% stake in the Coricancha mine for a reported $15 million. The mine, about 90 kilometers east of Peru's capital Lima, has zinc, lead, copper, gold and silver reserves, according to the company's website. Estimated resources include 120,000 metric tons of zinc, 33 million ounces of silver and 820,000 ounces of gold. Expansion works at the mine are currently underway, said Peru's mining ministry, and operations are expected to resume soon.

Although Glencore International wouldn't confirm when the Iscaycruz mine had restarted operations, Peru's mining ministry said it had authorized a restart as of April 27.

In other zinc news, Canadian explorer Zincore Metals Inc. (ZNC) announced it had listed for trading on the Lima stock exchange as of Monday.