UPDATE 1-Korea Zinc, Teck agree 10 pct rise in zinc treatment charges

Wed Feb 27, 2013 1:03pm EST
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* Zinc concentrates oversupply boosts processing fee

* Deal includes price participation clause

* European firms still negotiating

By Silvia Antonioli

CANCUN, Feb 27 (Reuters) - Canadian metals miner Teck and smelter Korea Zinc have agreed to processing fees of $210.50 per tonne in zinc for 2013, up more than 10 percent from last year's benchmark of $191, delegates at the International Zinc Conference told Reuters.

This increase, switches the profitability balance at least a little, from zinc miners to zinc smelters, many of which posted losses last year.

An increase was largely expected in the market due to a heavy oversupply of zinc concentrates.

When supplies of concentrate are in surplus, miners have to pay higher processing fees to smelters to refine it into zinc.

"Everyone expected the treatment charges to be higher as there is plenty of supply and less demand of concentrates from China compared with last year," a source at an Asian zinc producer said.   Continued...