By-Product Credits Drive Zinc Mining Profitability
Zinc mining operations have long relied on lead, silver, copper, and germanium as by-products to reduce unit costs. However, a recent shift in market dynamics has made these credits a crucial factor in determining profitability.
According to industry experts, by-product credits are now driving zinc cost competitiveness, rather than reductions in mine-site costs. This change is projected to lead to a decline in the all-in sustaining cost (AISC) of zinc mining operations by 2026.
The largest source of by-product revenue volatility at many polymetallic zinc operations is silver prices. Standard cost reporting often obscures this fact, making it essential to decompose and stress-test AISC under multiple by-product price scenarios.
Zinc mines are complex businesses that produce multiple commodities, including lead, silver, copper, and germanium. As a result, valuation frameworks need to reflect the true nature of these operations.