Peru's zinc miners struggling to halt slowdown in growth

Peru produced 1.47Mt zinc in 2017, up 10.2% from 1.34Mt the previous year as higher output at Antamina, Sierra Metals and Buenaventura's US$340mn Tambomayo gold-silver-zinc project offset declines at mines belonging to Volcan, Nexa Resources, Glencore and Trevali Mining, as well as other Buenaventura operations.

At least four zinc miners missed their 2017 production guidance as flooding and strikes hampered operations.

2018 OUTLOOK

Peru, the world's second largest zinc producer, is expected to see output growth slow this year as ore grades dwindle at ageing mines and no new zinc operations are on the immediate horizon, according to Scotiabank.

Zinc production rose 4.9% to 742,877t through the first half despite strikes earlier this year at Sierra's Yauricocha mine and Nexa's Cajamarquilla smelter.

THE TOP FIVE

1. Antamina, 2017 production: 372,100t

Antamina expects to produce 375,000-400,000t zinc at its combined copper-zinc mine in 2018 as the open pit operation taps into richer zinc areas in the skarn orebody. The miner is also looking to replace its fleet of 300t trucks with 360t capacity trucks.

Glencore and BHP each own a 33.75% stake in Antamina, while Canada's Teck Resources has 22.5% and Japan's Mitsubishi 10%. The mine produced 216,400t through H1, up 24%.

 2. Volcan, 2017 production: 255,100t

Volcan, Peru's largest zinc miner, didn't set production guidance after Swiss trader Glencore bought a controlling stake in the company late last year. Volcan, which said it is "focusing on medium term growth," plans to drill at least 284,000m this year at its mines and projects.

The company shut its Chungar unit for four weeks in the second quarter to implement safety measures following the acquisition by Glencore. Zinc output fell 7.8% to 115,200t in the first half.

3. Milpo, 2017 production: 219,054t

Nexa unit Milpo, the largest of the company's four mines, didn't set production guidance, although the Brazilian parent company expects its overall production to remain steady at 370,000-390,000t this year. Milpo, which continues to advance a program to link its El Porvenir-Atacocha underground operations, increased installed capacity at its Cerro Lindo mine and tapped into Atacocha's new San Gerardo deposit.

Milpo, which mainly sells its production to the Cajamarquilla refinery and traders Glencore, Trafigura Beheer and Louis Dreyfus, saw first half production drop 7% to 98,721t due to delays in developing new galleries at Cerro Lindo.

4. El Brocal, 2017 production: 51,511t

Buenaventura unit El Brocal set 2017 production guidance at 45,000-55,000t zinc as it continues to work on debottlenecking issues at its Colquijirca mine.

The company, whose operations were hit by flooding in 2017, has been focusing on El Brocal's copper operations to tap into stronger prices earlier this year. Production fell 10% to 26,151t in the first half.

5. Los Quenuales, 2017 production: 25,256t

Glencore unit Los Quenuales, which operates the Iscaycruz and Yauliyacu mines, cut back its zinc operations in 2015. The company, which saw its Peruvian output drop 13% last year, hasn't announced plans to restart closed operations.

Los Quenuales' production slid a further 4.5% to 11,927t in H1. Glencore is also a JV partner in Trevali's Santander mine, which is forecast to produce 54-57Mlb (24,545-25,900t) zinc this year compared with 53.1Mlb in 2017.