The mining newspaper for Alaska and Canada's North

Red Dog sees lower zinc output, price in 2015; faces higher tax in 2016

Teck Resources Ltd. Feb. 11 reported that the Red Dog Mine produced 567,000 metric tons of zinc in 2015, roughly five percent less than the 596,000 metric tons produced in 2014.

While ore grades and recoveries were up slightly at the Northwest Alaska operation, mill production was down.

Likewise, lead production at Red Dog was down about four percent from 112.5 metric tons in 2014 to 117.6 metric tons in 2015.

The zinc sold by Teck in 2015 averaged US87 cents per pound, down 13 percent from the US$1.00/lb. in 2014.

Zinc prices have rebounded from a low of US67 cents/lb. reached at the end of 2015 to its current price of roughly US75 cents/lb. Total global reported exchange stocks of zinc totaled at about 659,300 metric tons, or about 17 days of global consumption, compared with the 25-year average of 23 days.

Teck expects that recent zinc mine closures and announced production cuts will continue to restrain supplies of the galvanizing metal.

The company said it anticipates the Red Dog Mine will produce 545,000 to 570,000 metric tons of zinc and 115,000 to 120,000 metric tons of lead in 2016.

From 2017 to 2019, Red Dog's production is expected to be range from 500,000 to 550,000 metric tons of zinc and 100,000 to 110,000 metric tons of lead.

Studies are in progress to increase mill throughput and thus zinc metal production as feed grade continues to decline.

Teck's Alaska subsidiary that operates Red Dog has filed a complaint in Alaska Superior Court to prevent the Northwest Arctic Borough from enforcing a severance tax that was implemented at the beginning of 2016.

Teck Alaska contends that the tax violates its equal protection and due process rights, and that the imposition of the tax breaches a prior negotiated agreement with the municipality.

If legal, Teck says the new tax would increase annual payments to the municipality from about US$11.5 million under the prior agreement to an estimated US$30 to US$40 million, depending on zinc prices.

Teck said it has been advised that there is a sound legal basis for its complaint.

Author Bio

Shane Lasley, Publisher

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Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.


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