Xstrata Plc, the world's third-largest lead producer, will resume deliveries from its U.K. plant next month after a five-month disruption, easing a shortage of the metal that sent prices to a record.
The force majeure, or halt, on deliveries from the Northfleet refinery will be lifted and production figures for the six months to June will be given at the end of July, Xstrata's Brisbane-based spokeswoman Sue Sara said today.
Xstrata said Feb. 12 the refinery may miss shipments due to lower concentrate supplies from its Mt. Isa mine in northern Australia. The price of lead, used to make auto batteries, reached a record last week after China, the world's largest producer, said it will raise export taxes to curb overseas sales.
"If the (Northfleet) situation resolves, that will take some pressure off the supply and take heat out of the price,'' Andrew Harrington, a commodities analyst at Australia and New Zealand Banking Group Ltd., said in Sydney.
Lead futures on the London Metal Exchange reached a record $2,395 a ton on June 1, and closed at $2,370 a ton yesterday. They've risen 42 percent this year.
Lower Supply
Northfleet, located outside London, produced 162,000 metric tons of lead last year, compared with 161,000 tons in 2005, according to the Zug, Switzerland-based company. The lower lead supply from Mt. Isa was because the mine was moving to another type of ore, Xstrata's Chief Executive Officer Mick Davis said March 6.
BHP Billiton Ltd. and Doe Run Resources Corp. were the world's largest and second-largest lead producers in 2005, followed by Xstrata, according to information compiled by BHP and the British Geological Survey. Xstrata last year bought Canada's Falconbridge Ltd., adding a smelter in Canada.
Force majeure is a legal clause allowing a company to default on sales contracts due to circumstances beyond its control.
Mining companies produce about 3.5 million tons of lead a year compared with global consumption of 8 million tons, with the balance coming from recycling, said Gerard Burg, a minerals economist at National Australia Bank Ltd., in Melbourne.
"The market for lead is looking tight with the supply disruptions, and it's going to be in deficit this year,'' instead of an earlier forecast of a surplus, Burg said.
Lead supplies were also dented when Toronto-based Ivernia Inc. halted exports from a mine accounting for 3 percent of global production. It had to stop exports from its Australian lead mine in March due to an investigation into lead poisoning at the port of Esperance in Western Australian state. – Bloomberg
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