Lead price outperforms after mine shuts, more closures possible
By Eric Onstad
LONDON Jan 19 (Reuters) - Lead prices have bounced following a mine closure, which one analyst said could herald similar moves in other metals as sharp market falls threaten the profitability of high cost mines.
Three-month lead on the London Metal Exchange was the only metal in positive territory on Monday, closing 0.4 percent higher at $1,857 a tonne after surging 3.9 percent on Friday.
Prices jumped on expectations of lower supplies after Toronto-listed Invernia Inc. said on Friday it would suspend operations at its Paroo Station Mine in Western Australia, the world's largest lead carbonate mine.
"The current LME lead price has dropped well below sustainable levels and cannot support profitable ongoing operations," Chief Executive Wayne Richardson said in a statement. (bit.ly/1Bu2Y4s)
Lead prices tumbled by a quarter from late July last year until hitting a 30-month low of $1,743 a tonne last week.
The mine, which was forecast to produce about 80,000 tonnes of lead in concentrate last year, is unusual because it only produces lead, unlike most other lead operations which also produce sister metal zinc.
"That (80,000 tonnes) is approximately how much you're going to lose and that's substantial in the lead market," said Stephen Briggs, metals strategist at BNP Paribas in London.
"It's a very special type of lead concentrate so it's not that easy to replace with other stuff. That's why the lead price is substantially outperforming the other metals." Continued...