Nyrstar, the world’s second largest zinc smelter, has filed an arbitration request to the operator of Century Zinc mine to enforce “long-standing Life of Mine agreements” for the offtake of zinc concentrates, the company told Metal Bulletin.
The dispute centers on a life of mine offtake agreement Nyrstar had for concentrate from the Century mine in Australia, recently revived via tailings reprocessing by new operator New Century Resources.
Prior to the mine’s closure in late 2015, Nyrstar received approximately 90% of the zinc concentrates output from Century, which was once the world’s largest zinc mine, it said.
“New Century Resources announced an intention to re-start the mine some time ago and we have been in discussions with them for a number of months about the enforcement of our pre-existing rights to the offtake.” Nyrstar’s corporate communications manager Franziska Morroni said in an emailed statement on Wednesday February 7.
“As those discussions have not been resolved to our satisfaction, Nyrstar has been forced to commence arbitration proceedings in London to enforce its rights,” the spokeswoman added.
Nyrstar’s filing on February 6 came as New Century was preparing to announce its first offtake agreements with trading houses Transamine and Mercuria, in which it has agreed to sell an estimated total of 750,000 tonnes of 54% zinc concentrates from the project over three and a half years.
The mine is forecast to produce 507,000 tonnes per year of zinc concentrates over an initial 6.3-year mine life.
A 2011 Hong Kong Stock Exchange regulatory filing by former Century owner MMG noted the agreement, stating: “Nyrstar has a life-of-mine contract over Century’s production.”
New Century said in a statement it had not been shown these agreements which were entered into in 2007.
“New Century believes that the opportunistic claim by Nyrstar has no merit and that any historical agreements with Nyrstar were terminated well before the company acquired its interest in the Century Zinc mine,” it said in a regulatory filing published on Wednesday.
New Century said arbitration would not prevent the company from signing or performing its obligations under any new offtake agreement.
It also mentioned Nyrstar as one of the unsuccessful parties competing for the Century zinc concentrate offtake, which will be produced from tailing reprocessing in July at the earliest.
Historically, Nyrstar took 90% of Century zinc concentrates and processed it in the most part in its Hobart and Budel smelters, the smelter said.
Hobart in particular relied on Century for 70% of its feed up to 2015, records on Nyrstar’s website show.
After feed from Century zinc mine ceased in 2015, Nrystar diversified its zinc concentrates supply by entering into a commercial agreement with Trafigura and buying on the spot market, according to the company website.
It also invested in “de-bottlenecking” projects at both smelters to broaden the types of concentrates that can be processed by both smelters.