World zinc mining companies can pay 15 to 20 percent

World zinc mining companies can pay 15 to 20 percent less than the foundries of the raw material for processing into refined metal next year after fees were reduced in the cash market, according to Macquarie Group Ltd.

"Assuming a zinc base price of $ 2,000 a metric ton, we could see a base treatment charge of about $ 200 - $ 210 per dry metric tonne," the bank said in a report released today. This would be a reduction of about $ 40 - $ 50 per ton of reference for this year of $ 253 per tonne at a base price of $ 2,000 a tonne, the bank said.

Mining companies including Teck Resources Ltd., and foundries, and Korea Zinc Co. and Mitsui Mining & Foundry Co., are negotiating rates for next year. The producers seek lower rates when the raw material, or concentrate are called, in case of shortage. Zinc is used to galvanize steel.

The current differential between the terms of place and reference point is $ 125 to $ 145 a tonne, it said. The reference rates "will fall sharply in 2011, given the differential between the terms of reference, period," he said.

treatment costs are fees paid by miners to smelters for processing metal concentrates to produce and pay per dry metric tonne of zinc concentrate processed.

Miners typically pay a premium over market conditions in place to ensure reliable customers for concentration. The "differential of three digits would be very generous," the bank said.

Court Escalator

Zinc for delivery in three months advanced 0.8 percent to $ 2,293.50 a ton on the London Metal Exchange at 4:56 pm Tokyo time. Refined zinc production obtained at 1.1 million tonnes in October, surpassing the demand for 1.036 million tons, the International Lead and Zinc Study Group said Dec. 15. Production in September was 1.095 million tonnes against the demand of 1.07 million tonnes, the report said.

Rates also have "price participation" clauses allowing smelters to benefit from higher prices. An escalator is a percentage increase in the rate base treatment for each dollar increase in the price of zinc on the LME over the base price.

Mining companies can promote a new cut in the escalators and escalators called the reference point of 2011, the bank said. the participation of this year prices had been reduced to the narrow range of at least 20 years, he said.