Teck's 2026-28 guidance for Red Dog shows a structural decline in output from one of the industry's cornerstone mines. Production is expected at 375,000-415,000 tonnes compared to 430,000-470,000 tonnes in 2025, driven by declining ore grades as the open pit enters mature phases.
Higher unit costs compound the production decline. Teck's cash cost guidance for 2026 is $0.80-0.90/lb, compared to lower levels in prior years. This raises the global marginal cost of zinc production and sets a higher floor under LME prices.
Glencore's Lady Loretta mine in Australia, part of the Mt Isa complex, was scheduled for closure in 2025. The site was acquired by Austral Resources Australia Ltd. under a non-binding MOU for copper exploration, permanently removing a zinc concentrate source from the Australian supply chain.
These ex-China supply constraints contrast with a different picture in China. Chinese zinc ore availability has rebounded sharply, up 45% over January-July year-on-year. The Kunlun smelter added 560,000 t/y of capacity in Q4 2025, pushing China toward self-sufficiency.
The divergence between tightening ex-China supply and growing Chinese output creates a two-tier market. Treatment charges (TCs) are expected to recover from ~$80/t in 2025 toward ~$160/t in 2026 as Chinese smelters access domestic concentrate, but international TCs remain under pressure.
The Red Dog decline is a multi-year structural trend that will support zinc prices even as Chinese supply grows. Diversify zinc suppliers to include Chinese-origin material alongside traditional ex-China sources. Monitor treatment charge trends as a leading indicator of concentrate availability. For 2027 contracts, factor in a higher cost base reflecting declining mine grades industry-wide.