CRU: Mines and Projects at Risk from Lower Prices

By CRU Senior Analyst Christine Meilton

This month we’re looking at mine profitability and the tonnage at risk from lower metals prices and higher treatment charges, both for operating mines and new projects. Recent weeks have seen both zinc and lead prices tumble, and CRU believes that both metals have now passed a cyclical peak and will track lower over the medium-term. After peaking in mid-April at $3,000/t, zinc prices have lost more than 10 percent to trade around $2,600s/t, although they are still higher than at the start of this year. However, with demand still weak and production on the rise, they are only expected to trend further down. Sister mining metal lead peaked earlier, in February of this year, and although it has picked up in recent days on news of the outage at Port Pirie, it is not expected to make significant further gains. Indeed, after a seasonal recovery in the second half of this year it, too, is expected to track lower as the market moves into a surplus.