World’s biggest zinc producer exploring total exit from mining
Debt-laden European zinc producer Nyrstar (EBR:NYR) said Monday it plans to raise up to $296 million (€275m) through a share offering to pay down debt and has appointed bankers to explore a total exit from mining.
The Belgian company, which is the world's No.1 zinc producer, laid out a package of measures it is putting in place to try repaying a $447 million bond that matures in 2016 and also address ongoing problems with it mining division.
Nyrstar also announced a number of commercial supply agreements with Trafigura, the world’s second-largest metals trader and its main shareholder.
The commodity trader has agreed to buy as much as $135 million (€125m) of shares in a first-quarter rights offer totalling $270m to $296m. As part of the deal, Trafigura won’t raise its stake to more than 49% from over 20%, according to Nyrstar. Should the rights offer boost Trafigura’s holding above 30%, it won’t be obliged to make an offer for the rest of the stock, the company added.
Nyrstar shares jumped up as much as 9.4% in Brussels on the news and were trading 5.5% higher at €1.62 mid-afternoon.
They took a huge dip on Oct. 22, falling 27% in a matter of hours, after new chief executive Bill Scotting said the company was considering selling stock to meet its debt obligations.
On Monday, Scotting noted Trafigura’s involvement in the refinancing was not a “takeover by stealth”.
Nyrstar has been hit quite hard by the rout in commodities, with zinc down 24% this year on declining demand from top consumer China. The company said it’s mulling reducing zinc production from its mines by as much as 400,000 metric tons if prices stay depressed. That would almost match the 500,000 tonnes that Glencore, another leading zinc producer, recently cut.
The company has already suspended operations at its Mexico’s Campo Morado and Canada’s Myra Falls mines.