Multi-metals producer Nexa Resources has suspended mining and limited smelting operations in Peru after the local government declared a state of emergency and closed its borders due to the coronavirus (2019-nCoV) pandemic, the company said on Thursday March 19.
“Mining activities will be limited to critical operations and maintenance, with a reduced workforce during the quarantine period (15-day) stipulated by the Peruvian government,” Nexa Resources said.
“Additional safety measures and procedures are being discussed with our contractors to mitigate any potential impact of the global outbreak, including a revision of the construction schedule,” the company added.
Combined, Cerro Lindo, Atacocha and El Porvenir accounted for 198,000 tonnes (54.8%) of the 361,000 tonnes of zinc, 45,000 tonnes (87%) of the 51,700 tonnes of lead and 38,500 tonnes (100%) of the copper that Nexa Resources produced in 2019.
Several other Peruvian operations have already cut output or been placed under care and maintenance this week due to the state of emergency.
Meanwhile, Nexa Resources' operations in Brazil, including its Vazante and Morro Agudo mines as well as the Três Marias and Juiz de Fora zinc smelters, continue to operate normally, with the company ensuring all necessary measures are being taken to help protect its employees.
“As previously announced, the potential impact on Nexa’s 2020 operational guidance is still uncertain. In addition, the company is re-evaluating its capital expenditures and operational expenses, including project development and exploration investments. Nexa is also evaluating impacts of the outbreak with its suppliers, clients and contractors and addressing them as appropriate,” the company said.
News of the sudden production cuts across Peru and Chile has participants in the copper, zinc and lead markets on the lookout for what the possible impact to supply of mined metal will be and what that may mean for treatment charges (TCs), but most maintain it is too early to tell.
Fastmarkets’ monthly assessment for zinc spot concentrate TC, cif China was most recently at $280-315 per tonne on February 28, widening from $285-310 per tonne the month before.
Copper concentrates TCs have risen steadily following the Lunar New Year holiday (January 24-31) due to virus-related smelting disruptions. Fastmarkets’ weekly copper concentrates TC index, cif Asia Pacific was at $68 per tonne on March 13, up by 20.6% from $56.40 per tonne on February 7.
Nexa's 2020 production guidance for copper, zinc and lead in concentrates is 40,000-46,000 tonnes, 338,000-375,000 tonnes and 50,000-55,000 tonnes respectively.