Glencore holding 25,000t of zinc stocks after Zhairem ramp-up

“We’ve had a buildup in some inventory, particularly in Kazakhstan in our zinc business, so we’ve produced about 25,000 tonnes more than we sold … Stocks will stay around the 25,000 level,” said Glencore’s chief financial officer, Steven Kalmin.

“(Zhairem) is in quite a remote area and it’s quite a distance from the processing facilities,” he said. “Some of it is exported in concentrates to China … There’s a bottleneck in terms of rail cars and customs and clearing.”

Glencore, with smelters in Spain and Canada, expects its 2024 zinc unit cost to rise significantly from 5 cents per lb to 18.6 cents per lb, according to a July release.

It cited the impact of lower treatment charges (TCs), a key source of income for zinc smelters, which typically fall when zinc concentrate supplies are tight.

An unprecedented shortage of mined zinc concentrates due to disruptions and delays has led to the collapse of TCs since the start of 2024.

Zinc TCs flipped to negative this month for the first time ever, meaning smelters have to pay instead of being paid for turning concentrates to zinc.

But improved byproduct gains, including precious metals and copper, will help Glencore offset the impact of lower TCs during the period, as gold, silver and copper prices all rallied in May.

“We will actually see a 2-3% reduction year-on-year in our zinc unit cost in zinc, quite a bit of that is to do with lower power prices, particularly in Europe, having been at extreme levels through ’22 and into early ’23, given scarcity and energy prices back then,” Kalmin said.

Over the past five years, Glencore’s zinc production has shrunk, following sales of its shares of zinc projects in Bolivia and Peru.

Glencore’s own sourced zinc production was at 417,500 tons in the first half in 2024, down 22% from same period in 2019.