Zinc-concentrate-penalty-thresholds don't usually come up over lunch. But they have become a hot topic in the mining industry this week, as analysts try to wrap their heads around Taylor, a large zinc deposit in the US.
Taylor was found by Arizona Mining. Its shares have shot up this year, as the company has drilled out stellar zinc grades. On Tuesday morning, Global Mining Observer retracted an article focusing on manganese levels of 1.3 per cent in Taylor's zinc concentrate, higher than industry norms.
Arizona issued a press release, saying the article was “misleading”, conflating two distinct deposits. Scotiabank said the article was “unfounded”, whilst Canaccord Genuity said it was “erroneous”. Manganese impurities in concentrates are “beneficial” for smelters, Scotiabank said, because the impurity “saves smelters adding it.”
The comments reveal how poorly concentrates are understood, partly because smelters do not disclose their penalty thresholds, the level at which impurities start to rack-up charges. “It's a sliding scale,” one zinc company told Global Mining Observer. “It's not well understood and it's certainly not well discussed.”
5 grams per litre, equal to 0.5 per cent, is the
tipping point at which manganese goes from being beneficial to a smelter, slowing the corrosion of anodes, to being harmful, forming layers and clogging up tanks, lowering recoveries and causing downtime, according to a paper published last year by the University of Pretoria.
Now, zinc smelters have weighed in on the debate, confirming what everyone in the zinc industry already knows: stripping manganese impurities out of a zinc concentrate is complex and problematic. Processing manganese-heavy material causes downtime, says a smelter CEO, creating “a bottleneck” and forcing sellers into piecemeal contracts with several groups.
“Zinc and high manganese is a combination that no smelter wants,” says a Germany-based smelter restructuring specialist, who sits on the board of one of Switzerland's largest banks. “It's not good,” says the managing director of the largest concentrates trader in Australia.
Arizona Mining is more optimistic. Manganese levels of 1.3 per cent would lead to additional smelter charges of just $12 per tonne, making the cost “immaterial”. The figure, it said, was “estimated”. Arizona plans to “conduct further flotation work... in an effort to reduce the manganese in the zinc concentrate.”