Trafigura halts some Cuban zinc shipments as US blockade bites

Trafigura Group has told some customers they won’t get shipments from a zinc mine in Cuba, as the US ramps up pressure on the country via sanctions and an economic blockade that’s choking off fuel supplies.

The commodity trading house informed some smelters in China that they won’t receive cargoes of semi-processed zinc ores known as concentrates from the Castellanos project in Cuba, according to people familiar with the matter, who asked not to be identified because the discussions were private. It will replace those cargoes with other sources of feedstock, it told the buyers.

“Trafigura procures concentrates from a variety of sources and continues to supply its customers in compliance with sanctions applicable to it,” a company spokesperson said in an emailed statement.

The disruption is another sign of the strains facing Cuba’s economy as the Trump administration ramps up efforts to force regime change on the Communist-run country.

Fuel imports have dried up after the US blockaded shipments from Venezuela and other suppliers, and international companies are scrambling to manage their exposure after the Trump administration ordered firms to sever ties with Cuba’s military conglomerate.

Cuban President Miguel Díaz-Canel and members of his family were targeted in a fresh volley of sanctions on Thursday, along with Cuba’s armed forces, its internal surveillance network, and a prominent gold-mining operation. The suspension of operations at a nickel mine run by Sherritt International Corp. has also dealt a blow to an economy already starved of hard currency.

Trafigura holds a 49% stake in Castellanos under a joint venture established with the Cuban government in 2016, but isn’t the operator of the mine. So far the mine hasn’t been directly targeted by the US as it expands longstanding sanctions against the country.

The mine is a mid-sized project that can produce 100,000 tons of zinc concentrates and 50,000 tons of lead concentrates a year. The absence of those volumes, which typically all go to China, would normally have a negligible market impact. However, Chinese zinc smelters are already facing a historic shortage of raw material due to disruptions to Iranian and Russian supply.

Smelting charges for zinc concentrates sank to an all-time low of -$50 a ton by end of May, in a sign of growing competition for feedstock, according to pricing agency Fastmarkets.

Zinc has rallied about 13% on the London Metal Exchange this year. Prices rose to their highest in almost four years last week before paring some gains. Zinc was little changed at $3,537 a ton on the London Metal Exchange Monday.

Calls to Emincar SA, the joint-venture company that runs Castellanos, went unanswered.

(By Julian Luk and Archie Hunter)