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Appian Capital Advisory acquired the Rosh Pinah mine in 2023.
“Plenty of opportunities have been identified [since the acquisition] and we have already started working… on the mining side, on the metallurgical side and on the Rosh Pinah 2.0 expansion,” Bustamante said.
The Rosh Pinah 2.0 expansion project aims to raise mine output to 1.3 million tonnes per year of ore from 700,000 tpy, increasing zinc-equivalent production to roughly 75,000 tpy.
“We have completed most of the engineering work for the key components and we have already placed orders and secured production for key components such as the crushing system, filters, [semi-autogenous mill (SAG)] mill, flotation cells… everything is in good shape,” Bustamante told Fastmarkets.
“We believe that the first milestone will be when the paste backfill plant is operating, which should be sometime around [the third quarter of] 2025,” Bustamante added.
The Rosh Pinah 2.0 expansion is due for completion by July 2026, Bustamante confirmed.
The project comes at a time of several supply-side issues for the zinc market. Over the past year there has been a string of zinc mines suspending production amid rising operational costs and falling zinc prices.
“[The year] 2023 started with strong [zinc] price levels and then, over the year, prices started to decline materially. That was mostly the result of the demand situation, particularly from China and Europe,” Bustamante told Fastmarkets.
The London Metal Exchange three-month zinc price closed at $2,645.50 per tonne on Thursday April 4. This represents a 11.9% decline from $3,002 per tonne on January 3, 2023.
Zinc premiums in the physical market have also fallen significantly over the same period.
Fastmarkets’ most recent assessment of the zinc SHG min 99.995% ingot premium, dp fca Rotterdam was $170-200 per tonne on Tuesday April 2, losing more than two thirds of its value since January 3,2023 when it was at $500-530 per tonne.
But zinc’s struggles have also brought some advantages because falling zinc treatment charges (TCs) have benefited zinc miners, according to Bustamante.
“[Due to the] declining demand that we saw in 2023 and several operations getting into care and maintenance, supply has suffered and this has created a new balance of power between the zinc producers and the refineries. So now there is more refining capacity available and that has caused the benchmark TCs to decrease from $274 [per tonne] last year to $165 [per tonne] this year,” he said.
“This should have a very positive impact on the financial results of zinc producers,” he said.
Fastmarkets recently assessed the zinc spot concentrate TC, cif China at $50-80 per tonne on March 28, compared with $250-280 per tonne on January 13, 2023.
“[Because of falling prices] a lot of companies are delaying their mine development and also delaying any potential investments,” Bustamante told Fastmarkets.
Yet Bustamante expects zinc demand to significantly increase by the time the Rosh Pinah 2.0 expansion is complete.
“We believe that [zinc demand] is going to be following [gross domestic product] growth worldwide as a base scenario. But, on top of that, we believe there is a kicker to zinc because [of] all the infrastructure related to the energy transition… zinc does play an important role in renewable energy, including solar panels and wind power,” he said. “
Most importantly, the biggest driver is going to be on the supply side – and coincidentally the time the supply crunch is expected to happen is precisely when Rosh Pinah 2.0 will be coming into operation in 2026,” he said.
“We believe that the timing will be positive… and by the time Rosh Pinah 2.0 comes into production, we should be benefiting from a much better pricing environment,” Bustamante added.