Nyrstar cuts European Zn smelter output on energy costs

Market: Metals
13/10/21

Global metals group Nyrstar is curtailing production at its three European zinc smelters due to surging energy prices.

The company is reducing zinc output by up to half from today at its plants in Budel, the Netherlands, Balen in Belgium and Auby in France.

Significant increases in energy prices and the cost burden of carbon emitted by the electricity sector that is passed on to customers means it is no longer "economically feasible" to operate the plants at full capacity, Nyrstar said.

Indirect cost compensation for energy-intensive producers differs between European countries, putting Nyrstar's three assets at a competitive disadvantage, the company added.

Energy prices in Europe have continued to rise in recent months after spiking a week ago before falling back slightly. The Argus over-the-counter base load day-ahead prices for the Netherlands, Belgium and France were at €197.75/MWh, €200/MWh and €199/MWh, respectively, yesterday — up by 344.4pc, 298.9pc and 403pc from a year ago.

Nyrstar, which is majority-owned by trading group Trafigura, previously announced production cuts at its Budel-Dorplein zinc smelter on 24 September because of high energy prices.

"Despite the fact that our operations are more efficient than ever and are growing their capacity and production, we have had to take the difficult decision to cut back on production at this time," Nyrstar CEO Daniel Vanin said.

"Because our plants are fully electrified, we have the operational flexibility to do this quickly to respond to high energy prices. While the high energy prices will impact zinc production, our temporary curtailment is not expected to have any impact on jobs at Nyrstar. We will also make efforts to satisfy our contractual obligations."

Zinc prices on the London Metal Exchange were lifted in early-morning trade on the news of further production cuts at Nyrstar. The three-month zinc contract was trading at $3,373.50/t as of 10:28 BST (9:28 GMT), rising by 4pc from the official price yesterday.

By Corey Aunger

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