PERTH (miningweekly.com) – Base metals miner Consolidated has updated its offtake agreement with Industrias Penoles SA de CV that would reduce transport costs for the Plomosas concentrate that is delivered and sold to Penoles.
As part of the agreement, Consolidated Zinc has also granted Penoles an additional one-year option to extend the zinc concentrate purchase agreement, which covers all of the zinc concentrate produced at Plomosas, until the end of December 2023.
The zinc concentrate sales agreement previously in place used treatment charges linked to the annual zinc treatment charge benchmark, which is agreed upon annually during the first quarter of each year between the major zinc miners and smelters.
However, during 2020, the zinc spot price treatment charge for China-compliant concentrate continued to be significantly below the 2020 zinc treatment charge benchmark established earlier in the year.
Market forecasts have predicted that the 2021 zinc treatment charge benchmark is likely to be significantly lower than 2020, owing to a strong rebound in demand and limited new concentrate supply. Consolidated Zinc on Tuesday said that a reduction in the zinc benchmark treatment charges would benefit the company as the zinc treatment/transport costs were a major factor, resulting in an uplift in returns.