Ireland is feeling the strain as Europe’s largest producer of zinc with global prices for the metal plummeting due to an economic slowdown in China and surplus supply on world markets.
The country’s second-largest mine is shutting down with the loss of 370 jobs, because the zinc is running out and Indian owners Vedanta Resources Group have no plans for further production.
Set in a region with few other employment opportunities in rural southern Ireland, Lisheen Mine has been in operation since 1999.
“Mining operations will cease at the end of November and the milling operations will cease during December,” Vedanta said in a statement.
“There was a lot of expectation we’d get another few years,” Tim Bergin, a worker in the mine for the past 15 years, said.
“Up until last year even, there was a hope they would drill out, find more and they might extend it,” he said. “But it’s closing.”
Its closure would leave Tara, Europe’s largest zinc mine, as the only active zinc extraction point in Ireland, accounting for 150,000 to 200,000 tonnes per year.
Tara, owned by Swedish company Boliden AB, is expected to continue production until 2019.
“Given the current price environment I cannot envisage a new project,” Capital Economics analyst Caroline Bain said.
Zinc prices have fallen by almost 30 percent this year to six-year lows and earlier this month dropped temporarily below the US$1,500 per tonne threshold.
“Ireland was the 10th producer of zinc in the world, as well as the largest in Europe, with 300,000 tonnes of zinc mined in 2014,” said Justas Gedvilas, industry analyst at Euromonitor International.
The country was responsible for 2.2 percent of global output and 28 percent of European output last year.
The closure of Lisheen would almost halve Ireland’s zinc output and reduce global supply by 1.2 percent.
“Yet the closures should not have a huge effect on the overall Irish economy as mining contributes only 0.02 percent of Irish GDP,” Gedvilas said.
Zinc is a metal traditionally used to galvanize steel to protect it from corrosion, but is also used in construction, electronics and to make batteries.
Analysts said a reduction in supply could push up the global price of zinc somewhat, but mainly due to the depletion of larger sources such as Century in Australia, which is also due to close this year.
“Other mines are closing elsewhere so it is playing a part in the general picture of a tightening supply outlook,” Bain said.
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