The unexpected shutdown of Port Pirie Smelter in May, for example, had a limited impact on TCs. From what we are seeing in the field, we believe that tighter lending conditions in the Chinese market have a stronger impact on smelters. These conditions have reduced smelters' appetite to source concentrates, resulting in much higher than expected TCs. This lack of financing can also be felt in Chinese zinc smelting industry where utilization rates are low (high 80's) in comparison to where they could be given current near decade high (~US300/MT) TC levels.
With that said, the fundamentals of the lead concentrate market remain stable: weak Chinese domestic mine production this year is evidenced by strong demand from Chinese smelters for imported concentrates. We have observed small incremental increases in production from mines such as Lady Loretta and operations at Peñoles but that comes against the larger headwinds of San Cristobal's indefinite halt in production due to labor disputes, as well as Peñasquito's 6-week closure earlier in the year due to blockades.
While the slowdown in the automotive sector is a concern, we are seeing a less pronounced slowdown in electric battery vehicle sales than we are for gasoline vehicles. Furthermore, there is an inherent replacement cycle for lead batteries, providing some support in times of macroeconomic uncertainty. The August/September season is generally particularly strong with a good appetite for lead from battery makers.
We do not see the Port Pirie Smelter reopening in the immediate future. The Port Pirie's Regional Health Service issued a worrisome report about 45% increase in lead levels in the blood of young children within the past year. This became another serious concern on top of the current technological difficulties that the smelter is already facing.
In other news, Anglo American may face a class-action lawsuit on a lead mine in Zambia, where it managed operations over a half-century ago. Galena Mining's major shareholder Tim Roberts is doubling down on his investment, bringing his interest to 14.7%. Galena's flagship Abra mine completed its Feasibility study in July, with an estimated yearly production of 95,000 MT of lead and 805,000 ounces of silver for a capital expenditure of US $170 million. Check daily metal prices, monthly averages, and historical price data - all in one place at Open Mineral Exchange Platform - Analytics section.