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Sanctions delay to Russian zinc mine results in supply miscalculations, Reuters reports

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Sanctions delay to Russian zinc mine results in supply miscalculations, Reuters reports
Shipping containers sit on rail trailers at a logistics hub on the outskirts of Moscow on April 9, 2024. Since Moscow launched its military campaign in Ukraine and was hit with Western sanctions, it has set up parallel imports, a network of traders and intermediaries in third countries to get hold of banned goods and other products no longer available inside Russia. (Photo by NATALIA KOLESNIKOVA / AFP) (Photo by NATALIA KOLESNIKOVA/AFP via Getty Images)

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.

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“Kremniy EL” is one of the largest microelectronics plants in Russia that produces components widely used in Russian defense production, including for Pantsir air defense systems and Iskander missile systems.
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Olena Goncharova

Head of North America desk

Olena Goncharova is the Head of North America desk at The Kyiv Independent, where she has previously worked as a development manager and Canadian correspondent. She first joined the Kyiv Post, Ukraine's oldest English-language newspaper, as a staff writer in January 2012 and became the newspaper’s Canadian correspondent in June 2018. She is based in Edmonton, Alberta. Olena has a master’s degree in publishing and editing from the Institute of Journalism in Taras Shevchenko National University in Kyiv. Olena was a 2016 Alfred Friendly Press Partners fellow who worked for the Pittsburgh Post-Gazette for six months. The program is administered by the University of Missouri School of Journalism in Columbia.

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