Western sanctions on Russia's Ozernoye zinc mine have left the company struggling to replace key equipment needed to boost production, three sources familiar with the situation told Reuters.
This shortage is expected to impact global zinc supply forecasts for 2025, with projections likely overstated.
Without Ozernoye’s significant contribution, the ongoing shortage of zinc concentrate—an essential raw material for producing zinc metal used in galvanizing steel—is expected to continue. This supply crunch has already driven zinc prices to a 20-month high. Ozernoye has told Reuters it plans to produce zinc concentrate in volumes similar to previous targets, despite these challenges.
Ozernoye, which began production in September, aimed to reach full capacity by 2025 with an annual output of about 320,000 metric tons of zinc in concentrate, equivalent to 2.5% of the global mined zinc supply projected for next year, according to the International Lead & Zinc Study Group (ILZSG).
The ILZSG had forecast an 8.9% increase in zinc supply outside China for 2025, factoring in Ozernoye's ramp-up. However, the sources indicated that Ozernoye has not yet produced any material due to difficulties replacing the components needed to process ore into concentrate, which were damaged in a fire in November 2023.
These components, originally supplied by Glencore Technology, are no longer available to Ozernoye due to U.S. sanctions imposed after the fire. Glencore, which uses similar equipment in its Australian operations, confirmed it would comply with all sanctions but declined to comment further.
Natalia Yermak
(Updated: )
