Trevali Mining (TSX:TV) has temporarily stopped production at its Caribou zinc-lead-silver mine in Canada’s New Brunswick province as challenges presented by the spread of covid-19 have added to woes posed by weak conditions in the zinc market.
“This decision is no reflection on the quality of our team or the operating conditions in New Brunswick, and while the operation is paused, we will study a multitude of options in the Bathurst region to maximize value and reduce the overall cost structure of Caribou,” president Ricus Grimbeek, said in a media release.
Trevali expects to incur one-time costs of $5 million over the next two months related to moving the mine into care and maintenance mode, with costs after that of about $500,000 a month.
Zinc’s primary market is for strengthening steel. In 2016, commodities analysts began warning of a looming zinc shortage and soaring prices. In 2018, it hit $1.60 per pound, but it has since dropped to about $1 per pound.
The slump in prices, combined with high concentrate treatment charges, has made mine operations at Caribou uneconomic at this time, said Trivali.
The Vancouver-based miner will provide “transition assistance” to its workforce of about 370 in addition to severance, though no specifics were provided.
Long-term zinc demand is expected to recover soon as renewable energy, electric vehicles and global decarbonization and electrification move should drive demand for industrial metals up.
Trevali has doubled in size since acquiring two zinc mines from Glencore (LON: GLEN) in 2017, bumping it to mid-tier miner status, with a global headcount of about 2,000.
Besides Caribou, the company has three other zinc mines — Santander in Peru, Rosh Pinah in Namibia and Perkoa in Burkina Faso.