Asian zinc smelters to meet on processing fees

Teck Cominco, the world's second-largest zinc miner, will negotiate with Asian smelters this week on fees for processing raw material in 2007 that could affect supplies of the refined metal at a time of global shortage.

Executives from Teck Cominco's Red Dog mine in Alaska, the world's biggest zinc mine, are to meet Korea Zinc Co., the world's top zinc smelter, tomorrow and smelters in Japan, including MS Zinc Co., on January 24, according to officials of the two Asian companies in Seoul and Tokyo.

The processing fees are a significant source of revenue for smelters, which will be encouraged to increase capacity if they secure favourable terms. Refined supplies of zinc, used to galvanise steel, are expected to lag behind demand in 2006 and 2007, the International Lead and Zinc Study Group said October 9.

"I don't expect they can reach a deal" this week, said Takashi Murata, an analyst at the Daiwa Institute of Research in Tokyo.

A benchmark agreement may not be reached until the annual American Zinc Association meeting in late February, said Kang Dong Wan, director of Korea Zinc's raw material department, and Fumi Takadori, raw materials manager of MS Zinc.

MS Zinc, Japan's biggest zinc smelter, is a joint venture between Sumitomo Metal Mining Co. and Mitsui Mining & Smelting Co.

"The talks on zinc treatment charges will be different from similar negotiations in the copper industry,'' said Kim Gyung Jung at Samsung Securities in Seoul, referring to BHP Billiton winning lower fees for processing copper this year.