Europe's current crisis

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After aluminium, electrolytic zinc smelting is the most energy intensive non-ferrous metal refining process. The production of one tonne of refined zinc typically consumes 3.4MWh of power in the tank house, with power consumption elsewhere in the plant taking the total to 4.1MWh. Energy accounts for almost 50% of a smelter’s cash conversion cost. This has put zinc smelters in the firing line as European electricity prices soar. In this insight we examine the potential impact on margins for Europe's smelters, estimate the potential scale of production cuts and discuss some of the other factors that may influence the decision to cut production at Europe's plants.

Table of contents

  • Rising electricity prices squeeze smelter margins
  • How much refined zinc production might be lost?
  • Treatment charge revenues will influence decision making
  • Smelter sensitivity

Tables and charts

This report includes 4 images and tables including:

  • Average power prices in September 2020
  • Average power prices in September 2021
  • Nyrstar and Glencore are more exposed to non-contract treatment charges than other European producers
  • High power prices send the majority of European refined production cash negative

What's included

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    Europe's current crisis

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