Dugald River zinc mine achieves commercial production, ramp-up on schedule

MMG’s Dugald River zinc mine in Australia achieved commercial production on May 1, the company said on Monday May 7.

Dugald River has been online since November 8, 2017, with its first shipment of approximately 10,500 wet metric tonnes (wmt) of zinc concentrate to China on December 16.

MMG produced 47,138 tonnes of zinc in concentrate in this year’s first quarter, up 45% from the previous quarter, in which Dugald River mine had a 130% quarter-on-quarter increase in output.

The ramp-up of the mine is progressing on schedule, according to Mark Davis, MMG executive general manager for operations - Africa, Australia and Asia.

This should bring some relief to the global zinc concentrate market, currently tightly supplied due to a deficit in mined production, market sources said.

“We are not sure how long we can struggle with these low TCs [treatment charges] for zinc and I am sure most of other smelters are suffering the same way. Hopefully, new mine supply will provide us with some relief for the whole tightened concentrate market,” a smelter based in South China said.

Metal Bulletin assessed spot zinc TCs basis CIF East Asian ports at $15-35 per tonne on April 27.

But the zinc concentrate market expects terms to rise later in the year, when major tonnages from new projects such as Dugald River become available to smelters.

The annual zinc concentrate TC benchmark of 2018 dropped to a 12-year low at $ 147 per tonne, the lowest since 2006 and is 14.5% lower than the $172-per-tonne benchmark settled for 2017.

Miners and smelters had been negotiating for months over the annual deals, with disagreement over supply this year, which is set to swing from a tight market to relative balance.

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