The anticipated recovery in zinc mine supply is failing to materialize, as grade depletion at key operations undermines production targets. Five mines in Australia (McArthur River, Dugald River) and Peru (Antamina, Cerro Lindo, Milpo) are collectively producing 8% below plan for 2026, according to operational reports. The grade decline is accelerating as high-grade zones are exhausted.
Global zinc mine supply is now estimated at 12.3 million tonnes for 2026, growth of just 0.8% year-on-year — well below the 3.5% that was forecast in late 2025. The gap between mine supply and smelter demand (13.5 million tonnes) continues to be bridged by concentrate stock draws and limited imports from non-traditional sources.
Treatment charges reflect the dire concentrate market. Spot TCs for zinc concentrate remain at approximately $30/dmt, down from $150/dmt in early 2024. Some Chinese smelters are reportedly accepting negative TCs for high-impurity concentrates just to maintain throughput, betting on refined metal margins to compensate.
The concentrate deficit has knock-on effects for the refined market. Any smelter outage or maintenance shutdown now carries outsized price impact, as there is minimal concentrate inventory buffer. The ILZSG estimates the global refined zinc market will be in a 52,000-tonne deficit in 2026.
Grade depletion at major mines suggests the zinc market is structurally tighter than headline production figures indicate. This supports sustained prices above $3,200/mt for the rest of 2026. Procurement should secure annual contracts with price escalation clauses rather than fixed-rate deals. Consider hedging 50% of H2 2026 volume at current levels.