THE COST OF ZINC
Since zinc is traded on the London Metal Exchange (LME), and zinc quality brands registered by producers with the LME can be traded and the zinc stored in many registered warehouses around the world, zinc is a true mature commodity traded in a free market. Apart from being used as a basis for trading zinc held in warehouses, the LME free market pricing is also used as a basis for pricing zinc sold from producer to consumer as well as a basis for pricing zinc concentrates, the raw material used for producing zinc and sold from zinc miners to zinc smelters. The price of zinc concentrates (which may be higher or lower than the cost of producing concentrates) is closely linked to the price of zinc (which may also be higher or lower than the cost of production) but the pricing formula for concentrates is also affected by the perceived supply and demand of the concentrates themselves.
the years 2001-2004 the price of zinc was at historically low levels, expressed
The cost of producing zinc consists of two parts, the first part being the cost of the raw materials to produce the zinc, this part being linked to the zinc price. The second part is the cost of converting the zinc concentrates to metallic zinc for sale, this being affected more by local factors such as energy and labour costs where the smelter is located. Typically in 2010 the cash cost of producing zinc was $1800/tonne, raw materials accounting for $1210/tonne and conversion $590/tonne. Against a background of a LME average price of $2158/tonne, most smelters were in profit.
Last Updated: November 2011