With its mining segment posting a negative cash flow, Nyrstar’s new CEO Bill Scotting offered an update on the company’s operational performance as it idles some mining operations. Despite a sharp fall in commodity prices in Q3 2015, which saw the zinc price fall by more than 25%, the company remains positive on the medium– to long–term outlook for zinc as a supply challenged essential commodity for future global growth.
For the first nine months of 2015, Nyrstar’s metals processing segment produced 835,000 metric tons (mt) of zinc, contributing EUR 258 million in earnings, a 73% up year-on-year improvement. The Port Pirie Redevelopment is progressing according to schedule and is on track for ramp-up by the beginning of H2 2016.
The projected cost to complete the project, denominated in Australian dollars, has been impacted by adverse foreign exchange movements and additional engineering and project management services required. The total project cost is now forecast to increase by approximately 10% to AUD 563 million. “The metals processing project pipeline, predominantly focusing on post-Century de-constraining projects, are all progressing on budget and schedule. “We continue to review the timing of the remaining metals processing investments in light of group capex availability,” Scotting said.
For the mining segment, the company has suspended and deferred investment work at Myra Falls in Canada. The Campo Morado mine in Mexico has been placed on care and maintenance indefinitely. Other suspension options remain under evaluation, Scotting explained, and the company is targeting annual operating cost and capex reductions of EUR 40 million. “The process for divesting noncore assets in Peru is continuing with options now being considered for the mining operations that have been placed under care and maintenance or suspension,” Scotting said.
For the first nine months of 2015, the mining segment, with Myra Falls and Campo Morado operations suspended, delivered 179,000 mt of zinc in concentrate with full year zinc production now expected to come in at the low end of guidance (240,000 mt).
“While we remain very pleased with the operations and progress in the metals processing segment, where we have seen consistent production performance and continued efficiency gains, it is evident that the mining segment is in a difficult situation due to the past lack of investment in mine development and life of mine planning,” Scotting said. “We believe that a number of the mining assets have potential, but at current prices, the mining segment will need an extended period to regain operational strength and financial health.”