Glencore to slash zinc production by a third

The news means the Lady Loretta zinc mine near Mt Isa will be the second Australian zinc mine to close in the space of a few months, after Hong Kong listed miner MMG revealed last week that the Century zinc mine had come to the end of its working life.

Glencore announced last month it would suspend dividends, sell new shares and lower copper production in an effort to slash its debt amid a slump in global commodities prices. Global production was 13.3 million tons in 2014, according to the US Geological Survey.

The production cuts will be implemented in the current quarter, Glencore said. Prior to Glencore’s announcement, it had fallen 23 percent this year.

The company attributed the decision to preserving the value of Glencore’s reserves in the ground at a time of low zinc and lead prices that do not correctly value the scarce nature of the resources.

“Glencore remains positive about the medium and long term outlook for zinc, lead and silver prices”. The nation accounted for half of the world’s refined zinc consumption in 2014, according to Bloomberg Intelligence.

Premier Annastacia Palaszczuk says locals will be “absolutely gutted” the mining giant is downsizing its zinc operations by shutting two Queensland mines, with the potential loss of 311 jobs, but has suggested setting up an employment transition program for the workers.

The company said it is undertaking a statutory consultation process with its employees.

Glencore’s Australian zinc mines collectively produced 394,000 tonnes of zinc in concentrates during the first half of 2015. The company employs about 180 000 people across 150 mining and metallurgical, oil production and agricultural assets.