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Zinc producer Nyrstar cuts output by up to 50% at three European smelters on energy price surge

Highlights

Dutch power prices double since July 30

Balen among world's largest zinc smelters

Belgium-based Nyrstar, one of the world's largest producers of zinc, is to further cut production by up to 50% at its three European smelters from Oct. 13 due to the surge in energy prices, the company said.

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Dutch day-ahead power prices have doubled since July 30, from Eur95.49/MWh to Eur191.20/MWh ($184/MWh) for delivery Oct. 13, according to data from the EPEX Spot exchange.

EPEX data showed even greater inflation in France, where spot prices have climbed from Eur91.63/MWh to Eur194.28/MWh over a similar period.

"Significant increases in the cost of electricity in recent weeks, and the cost burden of carbon emitted by the electricity sector which is passed on to industrial and domestic customers, mean it is no longer economically feasible to operate the plant at full capacity," the company said in a statement Oct. 13.

"Indirect cost compensation for energy-intensive producers to protect their competitiveness versus non-EU producers varies by European country and this puts Nyrstar's Budel [Dutch zinc and zinc alloy smelter], Balen [Belgium zinc smelter] and Auby [French electrolytic zinc smelter] plants at a competitive disadvantage, compounding the impact of extreme energy prices," it said.

Nyrstar did not indicate exactly how much output was being reduced as a result of the production cutback at three of its plants.

The London Metal Exchange three-month spot zinc price was trading at $3,375.50/mt as of 0913 GMT, against the closing price of $3,263/mt on Oct. 12.

Operations

Nyrstar's fully electrified zinc smelter in Budel-Dorplein has an annual production capacity of around 300,000 mt, about 2% of global zinc supply and is one of the largest smelters in Europe.

The company's Balen smelter is one of the world's largest zinc smelters in terms of production volume with approximate zinc production of around 200,000 mt/year as well as zinc alloy output of around 200,000 mt/year. The Auby smelter is a mid-scale electrolytic zinc smelter with an annual production capacity of around 172,000 mt.

Nyrstar CEO Daniel Vanin said in a statement: "Despite the fact that our operations are more efficient than ever and are growing their capacity and production, we have had to take the difficult decision to cut back on production at this time. Because our plants are fully electrified, we have the operational flexibility to do this quickly to respond to high energy prices."

"While the high energy prices will impact zinc production, our temporary curtailment is not expected to have any impact on jobs at Nyrstar. We will also make the efforts to satisfy our contractual obligations," the CEO said.

Nyrstar operates three smelters in Europe, and also has operations in Australia and the US.