Volcan Yauli-min

Glencore said it will sell its stake in Volcan Compañia Minera S.A.A. to Transition Metals AG, a subsidiary of Integra Capital. Volcan is a major zinc producer located in the Andes in central Peru. As part of the transaction, Transition Metals will pay Glencore $20 million and Glencore has agreed to provide a secured facility of up to $40 million to fund certain mandatory tender offer obligations.

Glencore purchased 23% of Volcan in 2017 for $734 million (55% of its Class A shares). More recently, Volcan has struggled with a softening zinc market. During 2023, the price for zinc dropped from $3,400 per metric ton (mt) to $2,250/mt. Zinc prices have strengthened to nearly $2,900/mt today.

Volcan has five units with mines operating at high altitudes (more than 4,000 m above sea level). These include Yauli, Chungar, Alpamarca, Cerro de Pasco and Óxidos de Pasco, which together operate nine underground mines, three open pit mines, seven concentrators with a total processing capacity of 24,710 mt/d, and a 2,700 mt/d leaching plant.

In 2023, Volcan processed 9.4 million mt and produced 242,000 mt of zinc, 61,000 mt of lead, 15.2 million oz of silver, and 5,000 mt of copper. The bulk of the production originates from the Yauli and Cerro de Pasco units, which together mine 6 million mt/y of ore to produce 186,000 mt/y of zinc.

During March, Volcan submitted a notice of suspension to the Peruvian Ministry of Energy and Mines for the San Cristobal, Carahuacra and Ticlio mines, which are the major mines in its Yauli division. The company said the suspension was needed to adjust operating permits for the Rumichaca tailings deposit, at its Carahuacra mine.

Some of the Volcan mines, like the San Cristobal mine, trace their history to the 19th century. The area’s mineralogy consists of polymetallic epithermal systems, carbonate replacement deposits and polymetallic vein systems, as well as mineralization related to porphyries and skarns, which indicate economic potential.