Negative Fees Push Western Zinc Smelting Toward State Support

The Miner Used to Pay the Smelter

A smelter has long been paid by the ore it works: the miner pays a fee to have its concentrate turned into metal. Boliden, in Swedish, calls the fee smältlön, the smelting wage.¹ On spot terms the wage first fell below zero in 2024,² and on 9 October Fastmarkets put it at a record minus $115 to minus $150 a tonne for concentrate shipped into China,³ so the smelter pays the miner for the right to work.

Nyrstar, then owner of Tennessee's Clarksville zinc smelter, carried the reversal to Washington in May 2025. It told a critical-minerals inquiry that the collapse of both the spot and annual fees put "enormous pressure on the profitability of smelters", which it called key sources of by-product critical minerals, and urged Washington to consider tariffs, price floors and faster permits.² The smelter asked in the language of the fee. Seven months later the state spoke the language of strategy: $210 million for critical minerals in Clarksville, to the plant's next owner.⁴

The last row changes a smelter's business. Above zero, the miner's fee paid for furnace, power and payroll; below zero, a smelter buying spot ore must cover all three from the metals it recovers, or from somewhere else. Western smelters have not all lost the same wage: each plant's contract decides how much of the reversal reaches its accounts.

Whoever Pays Now Sits Far From the Furnace

A smelter that loses its wage has three possible payers, none at the furnace: a government in its budget, a group in its accounts, a buyer in the premium.

Boliden is the awkward witness. The spot fee it reports fell from minus $30 a tonne in March to minus $78 in June, yet its smelter segment's operating profit before inventory revaluation rose to SEK 707 million in the second quarter, from 585 million a year earlier.¹ Boliden says dearer metal, acid and premiums fully made up for lower volumes and weaker fees. The segment mixes copper, nickel, zinc and lead plants, so the profit belongs to a group.

An analyst at the LME seminar on 19 October said record-low fees, "weakening byproduct credits" and dear energy have left smelters "now loss-making".⁷ Boliden credits a by-product, acid, with part of its gain. Both can be true, because a credit that weakens across the market can still rise for a group that sells acid and copper too.

Europe's Smelters Wait on Berlin and The Hague

Europe has made more refined zinc than it used in four of the last five years, 2,174 thousand tonnes against 1,979 thousand in 2025.⁸ That gap is a flow, not a stock, and the industry's study group expects European output "to fall substantially this year".⁹

Budel's Fee Problem Becomes a Power Request

Budel, in the Netherlands, is the plant that cannot carry the loss alone. On 24 September Nyrstar put it under review, citing historically low fees and high energy costs; its chief executive, Guido Janssen, said the plant "is losing money every year".¹⁰ At full capacity Budel needs as much electricity as Eindhoven.¹¹ It sells acid, cadmium and a copper and cobalt cake too,¹² and Nyrstar has not said what they earn or what fee Budel pays. Market participants told Fastmarkets the fee is Budel's bigger problem, with power compounding it.³ Yet the fee arrives at The Hague as a power bill.

Governments Pay for Power but Not the Fee

The Hague has paid part of that bill. In 2024 it reopened compensation for the carbon cost in power prices with EUR 186 million, which Nyrstar, citing better markets too, said helped Budel restart.¹³ Its 2027 budget carries EUR 574 million of the same compensation,¹⁴ but not the grid-cost relief Nyrstar wanted.¹⁰ Berlin cuts the power price itself, and pays later: Germany's industrial power price, approved in Brussels in April, halves the wholesale price on half the power used in eligible activities, never below EUR 50 a megawatt hour.¹⁵ Zinc is an eligible sector, and applications and the first payments come in 2027.¹⁶ Power relief can keep a plant open without making it pay.

Nordenham's Contract Shields It From the Fee

Nordenham, Glencore's German zinc smelter, moves the fee by contract instead. It works on a toll-manufacturing, cost-plus model, and says in its 2024 accounts that zinc prices, fees and premiums have only a minor influence on its result.¹⁷ Yet its operator said in 2025 that niedrige Hüttenlöhne, low smelting wages, weigh on the business beside energy costs.¹⁸ The contract shields the local accounts; the fee is felt somewhere above them, in a chain nobody has published.

Washington Acts on Its Own Grounds

America has the reverse of Europe's problem: ore without furnaces. It refined 220 thousand tonnes of zinc in 2025 and used 820 thousand, relying on net imports for 73 per cent of its use.¹⁹ Its mines dug three times that, and most of the concentrate left the country, so Washington's answer is a furnace at home.

Korea Zinc bought Nyrstar's US assets, Clarksville among them, on 1 April 2026.²⁰ Months earlier, Commerce had awarded its subsidiary Crucible Metals $210 million under the CHIPS and Science Act for a Clarksville plant making 13 critical and strategic minerals.⁴ Semiconductor money went to a zinc smelter, and Commerce did not mention the fee in announcing it. Tennessee added $45 million, permits went on a federal fast track,²¹²² and construction is due in 2027.²³ Nyrstar asked Washington to protect the industry; Washington backed a new plant, for reasons of its own.

Washington also has votes: a 40.0 per cent voting interest in Crucible JV LLC, which owns 10.59 per cent of Korea Zinc and no direct share of the smelter.²⁴ Nothing yet shows silver paying for Clarksville, but Washington's partner earns more from silver than from zinc: in the first half Korea Zinc sold more than twice as much of it, by value.²⁵

Buyers Pay a Dearer Premium in Rotterdam

The third payer is the buyer. The Fastmarkets premium for high-grade zinc at Rotterdam, what a buyer pays above the exchange price, rose to $330 a tonne on 13 October from $217.50 in early March;³ on 1,000 tonnes, about $112,500 more.²⁶ It is an assessment, not an invoice, and cannot show whose lost fee it replaces. But at Boliden, by its own account, higher premiums helped make up for weaker fees:¹ there the buyer already pays part of the smelter's wage.

Weak Fees Send Some Smelters to the State

GEB's judgement is that collapsing fees push Western smelting toward the state through the asking: they pushed Nyrstar to ask, and the states that gave support gave it on their own grounds. Nyrstar carried the fee to Washington, and publicly to The Hague, and Trafigura, its owner, and Glencore both reported fees at times negative in their 2024 financial years.²⁷²⁸ Each payer pays something, in its own currency: The Hague part of Budel's power bill, Boliden's other metals, Boliden's buyers the premium.

If new mines lift the spot fee back above zero, the miner pays the smelter again, and Budel's case rests on its power bill alone. Boliden reports its third quarter on 29 October:²⁹ another rise on a year earlier would show a group can carry a negative fee, and a fall would strengthen the operators' case for the state.

The miner once paid for the furnace. Where it has stopped, the smelter turns to the state, which pays for the power the furnace burns and the minerals it recovers, but not for the fee.