By Eric Onstad
LONDON (Reuters) -Nyrstar said it plans to temporarily close two zinc mines in the U.S. state of Tennessee at the end of November due to weak prices and the impact of inflation, a third shutdown of zinc operations by producers in recent months.
Netherlands-based Nyrstar, which is wholly owned by trading and logistics company Trafigura, said in a statement it will "temporarily pause production operations" on Nov. 30 at its Middle Tennessee Mines.
That operation consists of two underground zinc mines, Gordonsville and Cumberland, according to Nyrstar's website.
Nyrstar does not disclose production data for individual mine operations, but the Middle Tennessee processing plant has a capacity of 3 million metric tons of ore and 50,000 tons of zinc concentrates annually, a spokesperson said.
Other Nyrstar operations in the state, the East Tennessee Mines, are still open. That processing plant has a capacity of 110,000 tons of concentrates a year.
The closures, along with shutdowns in Ireland and Portugal by other producers, will reduce an expected zinc market surplus for 2024, Morgan Stanley (NYSE:MS) analysts said in a note.
"However, with most zinc used to galvinise steel, which faces demand challenges from weak construction activity, we would still see surpluses. In our view, a stronger demand recovery is needed for a more sustained rally."
Zinc prices on the London Metal Exchange have slumped 16% so far this year, but spiked as much as 7% to a one-month high on Wednesday before paring gains to trade up 3.2% at $2,509 a metric ton.
During the suspension, Nyrstar will conduct drilling operations to find additional zinc, germanium and gallium resources, it added.
In July, Nyrstar said it was looking at germanium and gallium projects in Australia, Europe and the U.S., which could help ease any shortages created by China's export controls on the materials used for computer chips.