Glencore (LON: GLEN) is placing its zinc sulphide operation in Portovesme, Italy, on care and maintenance by the end of December at the latest and it will remain closed until there is 鈥渁 meaningful change in power market prices鈥�, the miner and commodity trader said on Monday.
The decision to close the plant, which has capacity of 100,000 tonnes a year, follows a sharp increase in power prices in Italy and the rest of Europe, Glencore said.
鈥淎s an electro-intensive industry, Portovesme is highly dependent on competitive and stable electricity prices,鈥� the company said in a media release.
Soaring prices of natural gas, used for power generation and heating, as well as low renewable energy output and higher carbon prices, have caused power prices in Europe to spike this year.
The continent is growing increasingly reliant on coal to keep lights and heat on as temperatures continue to drop.
Glencore said its decision, which affects about 400 direct employees, will be periodically reviewed against the backdrop of the European energy market.
The other production areas that are less dependent on electricity consumption, such as聽zinc recycling and lead production will continue to operate as usual, the company said.
Portovesme is the only Italian zinc and lead producer and is considered to be of national and strategic importance by the country鈥檚 government.
Global zinc production is estimated at about 14 million tonnes this year, with about half of that expected to come from China, the world鈥檚 largest producer.
Price jumps
Zinc prices rose as much as 3.4% to $3,349.50 a tonne on the London Metal Exchange on the news, the biggest gain in a month.聽
Global production had already been hit hard, with supply cuts announced by Trafigura Group,聽Nyrstar聽and Glencore sending prices surging 13% in October.聽
The metal is聽mainly used to聽galvanise聽steel or iron聽鈥撀爐hat is, to apply聽a zinc coating to stop聽it rusting.聽Galvanised steel is used聽in buildings, cars, white goods聽and electronics.聽
Click here聽for an interactive chart of zinc prices
The strength and flexibility of zinc alloys mean they are聽widely used聽to聽create die聽casts for industrial uses, such as machine聽parts.聽Zinc is also used to make聽brass and bronze.
(With files from Reuters)