Back to issue home page

Glenn Poynter, with wife and two young children in tow, decamped in Clarksville from Australia last January to take over operations of a 30-year-old zinc smelting plant, now owned by London-based Nyrstar, which formed recently from the assets of two companies from Belgium and Australia. Of course, Poynter has heard of the place before: "Take the last train to Clarksville," he quotes readily from The Monkees' 1966 anti-war hit. Lyrical references aside, Nyrstar is happy to be in Clarksville. The plant, sitting on 1,400 acres by the Cumberland River, is its sole U.S. asset and contributes heftily to the company's annual output of roughly one million tons of zinc. (Nyrstar is the world's biggest producer of the metal and its alloys.)

Operating similar plants on four continents, Nyrstar is the harbinger of consolidation in the highly fragmented zinc industry. Unlike the aluminum trade, most of which is controlled by a handful of big producers, Nyrstar makes up a mere 10%-12% of the world's zinc production, despite being the top producer.

Nyrstar's activity is just one sign of an invigorated industry. From 35 cents a pound in the early 2000s, zinc now commands a robust $1.25 per pound. This is particularly good news for mining interests in Tennessee, which was home to America's largest zinc mine in the 1980s (owned by Al Gore, no less). Fueled by demand from Brazil, China, Indonesia and Russia, mining companies are dusting off previously shuttered mines. Since 2006, Swiss giant Glencore International has bought and reopened three Tennessee mines—in New Market, Strawberry Plains and Mascot. Canada-based Strategic Resources Acquisition Corp. (SRA) has approached the Gores with the request to renew its mining license in Carthage, which was terminated in 2003 due to economic reasons. (SRA's other Tennessee mining sites are in Elmwood, Gordonsville, Stonewall and Cumberland.) Last year, the company struck a deal with Nyrstar to ship the concentrate it digs up across its operations for further processing in Clarksville.

For roughly $800 a ton, mining companies like SRA extract ore that contains 6% to 10% zinc. After processing it to reach 50% zinc concentration, the batch is shipped to a smelter like Nyrstar for an electrolytic process called Roast-Leach-Electrowin, resulting in 99.5% pure zinc. Regardless of the price of the mined concentrate, the smelter typically pays for 85% of the ore's zinc content, so that for every 1,000 kilograms it buys, Nyrstar receives 150 kilos free of charge. The rest of the company's margin comes from the zinc treatment charge—agreed upon annually by industry leaders—which includes the cost of converting the concentrate into pure metal. (The charge has risen from $180 per ton a couple of years ago to $300 this year.) But that's not all. Per mutual agreement, upon extracting the zinc, Nyrstar will return to SRA the remaining residue, which contains valuable germanium and gallium byproducts used in the semiconductor industry, helping SRA become a dominant player in those metals.

Judging by the recent upshot in zinc consumption (5.3% increase to 11.2 million tons a year), the zinc train to Clarksville is just getting underway.

Back to issue home page

Email to a Friend Print-Friendly Format