Sanctions Delay to Russian Zinc Mine: Supply Miscalculation Looms
Thursday, Oct 24, 2024 10:16 pm ET
1min read The global zinc market is bracing for a potential supply miscalculation due to the delayed launch of Russia's Ozernoye mine, as sanctions and operational challenges push back production. This setback, combined with a tightening raw materials supply chain, could exacerbate the global zinc concentrate supply deficit in 2024.
The Ozernoye mine, Russia's largest zinc mine and the fifth-largest globally, was initially slated to begin operations in 2023. However, a fire at the site in November 2023 and subsequent US and UK sanctions imposed on the mine's owner, Vladislav Sviblov, have delayed the project. The mine is now expected to start production in late 2024, with full capacity reached in 2025.
The delayed launch of the Ozernoye mine is expected to impact the global zinc price in 2024, potentially driving it higher as supply tightens. This delay could also have long-term effects on the global zinc market, considering the increasing demand for zinc in renewable energy technologies, such as wind turbines and solar panels.
The Ozernoye mine delay may also impact the global zinc market's ability to meet the growing demand for zinc in the automotive industry, as zinc is a critical component in die-castings used in vehicle manufacturing.
Zinc smelters and refineries are employing various strategies to mitigate the raw materials supply squeeze, such as adjusting planned maintenance and postponing new capacity commissioning. However, the effectiveness of these strategies remains to be seen, as the refined zinc market is still in significant surplus despite the tightening raw materials supply chain.
The supply miscalculation could have geopolitical implications, particularly regarding trade relations between China and Russia. As China is the world's largest refined zinc producer and consumer, any disruptions in the supply chain could strain relations between the two countries.
In conclusion, the delayed launch of the Ozernoye mine due to sanctions and operational challenges is poised to create a supply miscalculation in the global zinc market. This setback, combined with a tightening raw materials supply chain, could exacerbate the global zinc concentrate supply deficit in 2024, driving up prices and impacting key sectors such as construction, automotive, and energy storage. The geopolitical implications of this supply miscalculation may also have far-reaching consequences for trade relations between China and Russia.
The Ozernoye mine, Russia's largest zinc mine and the fifth-largest globally, was initially slated to begin operations in 2023. However, a fire at the site in November 2023 and subsequent US and UK sanctions imposed on the mine's owner, Vladislav Sviblov, have delayed the project. The mine is now expected to start production in late 2024, with full capacity reached in 2025.
The delayed launch of the Ozernoye mine is expected to impact the global zinc price in 2024, potentially driving it higher as supply tightens. This delay could also have long-term effects on the global zinc market, considering the increasing demand for zinc in renewable energy technologies, such as wind turbines and solar panels.
The Ozernoye mine delay may also impact the global zinc market's ability to meet the growing demand for zinc in the automotive industry, as zinc is a critical component in die-castings used in vehicle manufacturing.
Zinc smelters and refineries are employing various strategies to mitigate the raw materials supply squeeze, such as adjusting planned maintenance and postponing new capacity commissioning. However, the effectiveness of these strategies remains to be seen, as the refined zinc market is still in significant surplus despite the tightening raw materials supply chain.
The supply miscalculation could have geopolitical implications, particularly regarding trade relations between China and Russia. As China is the world's largest refined zinc producer and consumer, any disruptions in the supply chain could strain relations between the two countries.
In conclusion, the delayed launch of the Ozernoye mine due to sanctions and operational challenges is poised to create a supply miscalculation in the global zinc market. This setback, combined with a tightening raw materials supply chain, could exacerbate the global zinc concentrate supply deficit in 2024, driving up prices and impacting key sectors such as construction, automotive, and energy storage. The geopolitical implications of this supply miscalculation may also have far-reaching consequences for trade relations between China and Russia.
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