Zinc prices climbed to a three-week high on Wednesday after Swedish mining company Boliden said it would suspend production at Europe's largest zinc mine in Ireland next month due to "unsustainable financial losses".
Benchmark zinc was the biggest gainer on the London Metal Exchange (LME), up 3 percent at $2,452 a tonne by 1130 GMT, the highest since May 22.
Boliden also said it expected a negative impact on second-quarter earnings before interest and tax of 700 million Swedish crowns ($65 million) as the company's largest production unit, Sweden's Ronnskar smelter, was forced to halt production after a fire overnight.
Poliden said the factory's cells were completely destroyed by the fire. Other production at Ronnskar, a major producer of copper, zinc, lead and other metals, has also been suspended for safety reasons until further notice.
In Ireland, the company said on Tuesday it planned to cut 650 jobs at its Tara mine. The mine has been hit by operational problems, falling zinc prices and high energy costs. The company added that it would keep cutting jobs until conditions improved.
The Tara mine produced 103,000 tonnes of zinc concentrate last year, accounting for 40 per cent of the company's zinc concentrate output, according to Boliden.
In the absence of zinc stocks in LME-registered warehouses in Europe, mine shutdowns will tighten regional supply, LME data show.
"In the long-term interest of Boliden Tara Mining, we have decided to suspend operations and place the mine in a care and maintenance state," Gunnar Nystrom, Boliden Tara Mining general manager, said in a statement.
Boliden acquired Ireland's Tara mine in 2004, turning it into a prominent zinc and lead producer with more than 2 million tons of ore mined annually.
The company said it expected lower second-quarter earnings in part due to lower-than-expected ore grades at Tara and the Kevitsa nickel-copper mine in Finland.
