"Korea Zinc Inc, the world's third-largest zinc smelter, has agreed to take a 15 percent drop in annual processing fees for 2017 as smelters grapple with a dearth of mine supply, Metal Bulletin reported.
The South Korean firm agreed annual treatment charges with Canada's Teck Resources of $172 per tonne, Metal Bulletin reported, citing unidentified people with knowledge of the matter.
The first major deal of the year, it is likely to set the global benchmark and compares to $188 a tonne in 2016 agreed between Teck and Glencore, the deal that set last year's benchmark.
Korea Zinc declined to comment. Teck Resources did not immediately respond to a request for comment.
Mining companies pay treatment charges (TCs) to smelters, to have their concentrates turned into refined metal. The charges fall when supplies dwindle as smelters compete to find supply.
Zinc mine supply has been shrinking as several blockbuster mines, such as Australia's Century and Ireland's Lisheen, have been tapped out with no new major lodes in the pipeline.
Korea Zinc said last month it planned to cut its refined zinc production by 7.7 percent to just under 600,0000 tonnes this year due to tightening supply and low treatment charges."
