***** News) - Higher by-product credits, for sales of other...

Kitco News) - Higher by-product credits, for sales of other metals, have driven down producers’ reported operating costs for mining zinc, Barclays Capital says. The mining sector overall faces cost inflation, in particular energy. But in the case of zinc, the costs reported by companies fell in 2011 due to the offset of higher prices fetched for sales of by-product metals. “Zinc ore does not just contain zinc. It can also be rich in valuable commodities, such as copper, silver, lead and gold,” Barclays says. These by-product credits have therefore reduced the cash operating costs for the zinc itself. Barclays looks for the trend to continue in 2012. This has implications of the cost curve and sensitivity of zinc miners to the zinc price, Barclays says. In a nutshell, by-product credits are so high that they reduce the relevance of the zinc price on a mine’s revenues. “So, when trying to evaluate the price level at which zinc miners might cut production, there is more to consider than the zinc price alone.”