November 22, 2019: Glencore, the British-Swiss trading and mining company, has closed its primary lead smelter in Belledune, Canada, the firm announced on November 13, leaving just two primary lead smelters in the entire continent of North America.
The New Brunswick smelter will be wound down by the end of the year, with 420 staff losing their jobs and a handful being kept on to work on the decommissioning, the company said.
At the time of going to press, Glencore had not commented directly to BESB about the closure.
Industry analysts have told BESB that the closure is bound to have some effect on battery manufacturers in the US and Canada, although one of the largest of these, Exide Technologies, says 100% of its lead comes from recycled sources, most of which is produced in its own facilities.
However many battery manufacturers in the northeast of the US would be affected, said Farid Ahmed, principal analyst for lead markets with Wood Mackenzie.
“Add to that the likely reduced lead output from Teck at their Trail smelter, plus the likely reduction in Korea of lead imports next year, and the high level of scrap exports from the US (mostly to Korea and India), and we could see some tightness emerging in the US market as next year unfolds,” he said.
“The news does not come as a big surprise, given that this smelter has been struggling to make a notable contribution to Glencore’s multi-commodity portfolio for years,” said Neil Hawkes, principal analyst at the Commodity Research Unit in London.
“The main impact of Belledune’s closure will be on primary lead supplies to the North American market. Provincial trade data confirms that all of the refined lead exported overseas from the Canadian province of New Brunswick (where Belledune is the only lead producer) goes to the US.
“This smelter’s impending closure leaves just two primary lead producers within North America — Teck’s Trail in western Canada and Peñoles’ Torreón in northern Mexico.
“Given the limited scope for either of these smelters to raise production, imports into the region may well have to rise again, having fallen in recent years as a tighter Asian lead market has dried up the flow across the Pacific. So there could well be some upward pressure on primary lead premia to attract higher imports to fill the gap left by Belledune.
“Also, some industrial lead battery makers could reassess their primary lead needs and switch to using more secondary lead for more battery products, putting some upward pressure on secondary lead premia.
“Even before taking into account the winding down of operations in the weeks ahead, CRU was already estimating that strike-hit refined lead production this year would be around 50,000t, down from around 70,000t in 2018 (Glencore stopped reporting Belledune production in 2Q 2018) and its lowest annual total since the early 1990s.”
In 2017, Reuters reported that Glencore had increased its production of copper and cobalt in the five years up to 2016, signalling a new focus on supplying the EV market.
“The analysis (of research compiled by S&P Global Market Intelligence for Reuters) supports Glencore’s assertion it is well positioned to capitalize on an anticipated surge in demand for electric cars in the coming decade,” Reuters said.