Energy prices force Nyrstar to halt French Zn smelter

Global metals group Nyrstar is putting its Auby zinc smelter in France on care and maintenance from the first week of January because of high power prices in the country.

"Power prices, already at historically high levels across Europe, have continued to rise in recent weeks in France, in excess of neighbouring European countries," Nyrstar said.

"The price outlook for electricity prices in France in early 2022 indicates continued high prices and significant volatility."

Nyrstar said that while operations are halted at the French smelter it will bring forward planned maintenance and planned investment into the project will continue.

The situation will be under continuous review and production at Auby will resume once it is economically feasible.

Energy prices in Europe have soared in recent months putting pressure on metals producers, and French energy prices have been volatile. The Argus over-the-counter base-load day-ahead price for France was €367/MWh on 15 December, surging by 595.5pc from prices a year ago.

The French OTC base-load day-ahead price spiked to €588/MWh on 26 November before falling back to still significantly high levels.

Operations at Nystar's other two European zinc smelters — Balen in Belgium and Budel in the Netherlands — will continue at reduced capacity.

Both assets benefit from the group's "highly efficient operations and adaptable electrolytic smelting process which enable production to be reduced at times of peak power prices", Nyrstar said.

Energy prices in the Netherlands and Belgium are still at high levels with the Argus OTC base-load day-ahead prices at €340/MWh and €358.35/MWh, respectively, up by 639.1pc and 638.9pc from a year ago.

Nyrstar, which is majority-owned by trading group Trafigura, made the decision to curtail production by up to 50pc at its three European smelters in October because high energy costs made it no longer economically feasible to operate at full capacity.

Zinc prices on the London Metal Exchange (LME) have had little time to digest the update from Nyrstar but have already found higher ground.

The three-month zinc contract was at $3,411/t as of 16:11 GMT, up by 1.6pc from the day's official price of $3,357/t.

By Corey Aunger