* Herculaneum is the last primary U.S. lead smelter
* News contributed to lead market's rally on Friday
* Doe Run aims to diversify beyond lead
By Carole Vaporean
NEW YORK, June 29 Doe Run Co has canceled plans
to build a primary lead smelter in Missouri and will push ahead
with the closure of its Herculaneum plant, the last primary lead
smelter in the United States, by the end of next year, it said
The St Louis, Mo. -based company has abandoned plans for a
new smelter, which would have replaced Herculaneum when it
closes at the end of 2013, because it did not make financial
"Doe Run has decided not to build its proposed, lead
electro-winning plant to process its Missouri mineral resources.
We concluded that building a plant here would generate an
unacceptable financial risk to the company," Jerry Pyatt, vice
president and chief operating officer, said in a press release.
Doe Run announced it would mothball Herculaneum last year
after a U.S. government order to install cleaner technology. The
new smelter would have complied with stricter air standards.
News that U.S. primary lead production will end contributed
to higher lead prices on the London Metal Exchange on Friday,
traders said. Three-month prices ended at $1,861 per tonne, up
almost 4 percent.
Premiums paid in excess of the LME price for physical
delivery of the metal were between 6.5 and 8 cents per lb.
Domestic consumers, mainly battery makers, will have to buy
their primary lead abroad. Herculaneum produces about 130,000
short tons of lead per year and supplies about 8 percent of
United States' annual lead demand.
Teck Resources Ltd in Canada is the only other high-purity
primary lead producer in North America.
"From a global standpoint, it will not be that big of a
deal, but for the North American consumer it will be a lot more
difficult," said Justin Honrath, metals analyst at CPM Group.
"They'll be relying on outside producers which will probably
result in a regional shifting of premiums. It will be a tighter
market than if Herculaneum was still operating."
Some 60 percent of 2011's global output of 10.64 million
tonnes came from secondary sources, with Australia and China
accounting for over half of global primary production.
The company will continue to operate its mine, milling and
recycling operations at the site.
Concentrates from the mine will be sold into the world
market, although the company may decide to arrange tolling
agreements, whereby a third party would refine its ore into
metal and Doe Run would sell the finished product, Pyatt said.
Doe Run plans to expand exploration in Missouri, where it
has been mining for nearly 150 years, as well as other locations
in North America, where its new electro-winning technology might
be used to extract lead along with other metals.
Doe Run produces zinc, silver, and small amounts of copper
as byproducts of its lead production, but aims to diversify into
other base metals, silver and cobalt.
"If we can find some other resources whether it's zinc,
copper or some of the other metals, then we'd be comfortable
with that," said Pyatt.
Doe Run will continue to operate is 160,0000-tonne-per-year
Buick secondary smelter in Boss, Missouri, one of the world's
largest lead recycling facilities.
Pyatt said the company was also working with a third party
to explore options for the Herculaneum site. Located on the
Mississippi River, he said a port facility was one possibility.
The lead producer will work with the 278 employees affected
by the Herculaneum shutdown, he said.