Boliden’s Tara Zinc Mine on Hold Due to Dwindling Profits, Escalating Expenses

Plummeting zinc metal prices and rising energy costs recently prompted Boliden to place its Tara zinc mine on care and maintenance until further notice. “The business is currently cash flow negative due to a combination of factors,” the Swedish metals producer said. Officials went on to specify that these operational challenges included “a decline in the price of zinc, high energy prices, and general cost inflation.” Tara is an underground mine about 60 kilometers northwest of Dublin, Ireland.

Zinc prices began a sharp decline in January due to poor economic indicators and increasing supply. The bourse indicated that the official three-month price on the London Metal Exchange was $2,478 per metric tonne on June 16. This reflected a more than a quarter drop from the $3,429 seen on January 24. Officials at Boliden were not available for comment on the matter. However, one source told MetalMiner that the company may review the situation in the next three months, particularly if zinc prices recover.

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High Energy Costs a Major Reason for the Halt

Tara’s operating profit declined 17% in 2022 to SEK 441 million ($41.1 million) from SEK 534 million ($50 million) in 2021. These figures come directly from Boliden’s annual report, which the company released back on March 8. “For Tara, 2022 was characterized by production restrictions and cost increases, partly linked to the major increase in water in-flow in the fourth quarter of 2021,” Boliden reported.   

The benchmark Dutch TTF gas price was €34.90 ($38.12) per megawatt hour on June 20. According to information from Trading Economics, this is still seven times higher than the €5.11 ($5.58) quoted during the week of June 22, 2020. The elevated prices remain a significant problem. This is despite prices from the unprecedented 2022 highs caused by Russia’s invasion of Ukraine.

The source also told MetalMiner that Boliden’s actions might be a move to elicit help. “This is possibly an attempt to get assistance on high power prices from the Irish government,” the source added. “[and] also to get unions to accept updated working practices,”

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Tara’s Zinc Metal and Lead Outputs Decline

Tara Mines is a zinc and lead mine located near Navan in County Meath, Ireland. According to Boliden’s 2022 annual report, inferred resources at the site in 2022 totaled 38.2 million metric tonnes, of which 7.5% was zinc metal and 1.5% was lead. Meanwhile, probable reserves at the site fell 10% year on year, totaling 13.9 million metric tonnes in 2022. This contrasts starkly with the 15.5 million metric tonnes seen the previous year.

The report also indicated that zinc grade in the proven reserves was about 5.5%, while lead was 1.5%. Meanwhile, zinc in concentrate production was 198,000 metric tonnes in 2022, at 54,7% grade, a decline of 3.88%.

Zinc’s main application is as feedstock for the production of hot dipped galvanized sheet. The resulting HDGS has further applications in industries ranging from auto manufacturing to construction. Boliden mines the ore in Ireland and then ships the raw material to its smelters at Kokkola and Odda in Finland and Norway, respectively.

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