Glencore is moving its zinc sulphide plant in Portovesme, Italy, for maintenance and will remain closed until a “significant price change in the electricity market” occurs.
The decision to close the 100,000 tonnes per year plant follows sharp increases in electricity prices in Italy and the rest of Europe, Glencore reports.
Portovesme is the only Italian zinc and lead producer and is considered by the government as an enterprise of national and strategic importance.
Metal is mainly used for galvanizing steel, that is, for applying a zinc coating to prevent rusting. Galvanized steel is used in construction, automobiles, home appliances, and electronics. The strength and flexibility of zinc alloys means they are widely used to create industrial castings such as machine parts. Zinc is also used to make brass and bronze.
Rising prices for natural gas used for electricity and heating, as well as low renewable energy production and higher carbon prices, have caused a surge in electricity prices in Europe this year.
The continent increasingly relies on coal to keep it light and warm as temperatures continue to drop.
Glencore said its decision, which affects about 400 direct employees, will be periodically reviewed against the backdrop of the European energy market.
The company said other manufacturing areas that are less dependent on electricity consumption, such as zinc processing and lead production, will continue to operate as usual.
World zinc production this year is estimated at about 14 million tonnes, with about half of this expected to come from China, the world's largest producer.
Zinc prices rose 3.4% to $ 3,349.50 a tonne on the London Metal Exchange on the news, the largest gain in a month.
Global production has already been hit hard by supply cuts announced by Trafigura Group, Nyrstar and Glencore, with prices up 13% in October.