Singapore 08/08/2016 - Nyrstar’s production of zinc metal and zinc in concentrate fell in the first half of this year, according to its first half financial report published Monday.
Its zinc metal output fell nine percent year-on-year to 507,000 tonnes in January-June.
The decline in its refined zinc output is due to planned maintenance shutdown at the Auby smelter in France and Balen in Belgium, the loss of production at its Clarksville plant in the US owing to reduced feed from the Tennessee mines which was placed on care and maintenance last December, and reduced output at the Hobart operations in Australia due to unplanned cellhouse repairs.
But its lead metal production rose 12 percent year-on-year to 95,000 tonnes in the first half due to strong operation performance at its Port Pirie operations in Australia.
A planned 4-week maintenance shutdown of the blast furnace at the operations previously scheduled for the second half of this year has been rescheduled to the first half of 2017 to minimise any potential impact on the Port Pirie Redevelopment commissioning and ramp-up schedule, Nyrstar said.
The Port Pirie Redevelopment project commenced initial commissioning activities towards the end of the first half of this year and is progressing in line with its schedule, with commissioning and ramp-up activities to continue through the second half of this year and into 2017. The redevelopment involves transforming the primary lead smelter into a polymetallic processing and recovery facility.
Nyrstar’s metal processing segment posted an underlying EBITDA of 104 million euros ($115 million) in the first half, 43 percent lower over the same period last year due to decreased zinc prices, lower treatment charges and lower zinc metal production volume.
Nyrstar’s zinc in concentrate production dipped 39 percent year-on-year to 65,000 tonnes, and its lead in concentrate production slumped 52 percent year-on-year to 3,200 tonnes in the first half.
Production in its mining segment was affected due to the suspension of operations at Campo Morado in Mexico, Myra Falls in Canada and Tennessee, as well as reduced grade and ore throughput at El Mochito in Honduras. The reduced ore throughput at El Mochito was primarily due to production suspensions linked to mining fatalities during the first quarter.
Campo Morado was suspended since the start of 2015 and Myra Falls since May 2015.
Nyrstar's mining segment registered a negative EBITDA of six million euros in the first half compared to a positive five million euro EBITDA in the same period last year. This is due to the operation suspension at the Tennesse mines and lower zinc prices.
Production from El Toqui zinc-lead-gold mine in Chile has also been excluded from its operations following its sale in June this year.
Overall, the company achieved EBITDA of 84 million euros during the first half, down 50 percent from the same period last year on lower commodity prices and output from its metals processing and mining businesses.
“With the balance sheet strengthening initiatives largely completed for 2016, the strategic priorities for the second half of the year and into 2017 will be to advance the divestment of the mining segment; deliver on the Port Pirie Redevelopment; and make continued operational improvements and cost savings to benefit from the forecasted strengthening of zinc market fundamentals,” Bill Scotting, Nyrstar’s CEO, said.
MORE INTEREST IN MINES
On its mining asset divestments, Nyrstar said it has continued to negotiate with potential buyers that has moved into the second phase of its divestment progress and have been undertaking due diligence and site visits.
With prices having risen considerably in the year to date, a number of new parties have expressed an interest in the mines and have since joined the divestment process, it added.
Coupled with longer than expected due diligence and negotiation timing, the process has thus been extended versus the original timeframe - it expects to announce the divestment of additional mines in the first half, but with the possibility that some mines will be held into 2017.
The company owns eight mines in the US, Canada, Honduras, Peru and Chile with annual zinc in concentrate production of around 278,000 tonnes.