Kipushi is ready to be one of many world’s largest zinc mines, with output deliberate at greater than 250,000 tons per yr, and can produce a semi-processed type of ore often called focus that’s at the moment in tight provide.
For Trafigura, the deal will assist cement its place within the zinc concentrates market, with neither of its main rivals Glencore or IXM getting a share of the offtake. Glencore, lengthy a dominant participant within the zinc market, has just lately been making adjustments on the prime of its zinc unit and taking steps to exit sure investments.
The marketplace for zinc concentrates has been extraordinarily tight, with processing charges paid by miners to smelters plunging as mine provide disappoints and smelters in Europe reopen within the wake of the 2021-2022 vitality disaster. On the spot market, the so-called remedy fees have fallen to only $5 a ton, the bottom since not less than 2014, in line with Fastmarkets, whereas yearly agreed “benchmark” remedy fees dropped 40% this yr.
Glencore deal
Ivanhoe final yr introduced that it had signed a time period sheet to promote all the zinc output of the Kipushi mine to Glencore in alternate for a $250 million financing facility.
However since then, Glencore has pulled again from that deal, the individuals stated, amid a number of senior adjustments in its zinc division. Nick Popovic, the co-head of zinc and copper buying and selling who was pictured on the signing ceremony for the Kipushi time period sheet, retired from the corporate a number of months later.
In the meantime IXM, the metals dealer owned by China’s CMOC Group Ltd., had been in superior negotiations for a share of the offtake from Kipushi however did not agree a mortgage deal in time, the individuals stated. IXM’s head of lead and zinc, Xavier-Alexandre Ortiz, left the corporate final week, with a spokesperson saying that “ambitions for the enterprise differed.”
Ivanhoe declined to remark. The miner had beforehand stated that it had obtained “vital extra curiosity” from potential patrons of Kipushi focus since agreeing the time period sheet with Glencore, and that it was in negotiations with quite a few events for offers that would come with financing of “$200 million or increased.”
Whereas the contracts are being finalized, it’s nonetheless attainable they could not all lead to offers.
Spokespeople for Citic Metallic, which owns a 24% stake in Ivanhoe, and Trafigura declined to remark. Boliden, which owns zinc smelters in Finland and Norway, stated on Tuesday it doesn’t touch upon ongoing contract negotiations and had not signed a contract for provide from Kipushi. Glencore and IXM additionally declined to remark.
Glencore’s failure to go forward with the deal it had agreed final yr comes amid wider adjustments in its zinc unit — a market the place it as soon as dominated, boasting a greater than 50% share of the “addressable” marketplace for zinc metallic and concentrates in its 2011 IPO prospectus.
Along with Popovic’s retirement, Glencore earlier this yr named a brand new head of its lead and zinc property, Suresh Vadnagra, changing the earlier co-heads Denis Hamel and Aline Coté. The corporate additionally just lately offered its controlling stake in Peruvian zinc miner Volcan Cia Minera SAA.
(By Jack Farchy and Michael J. Kavanagh)