China's Minmetals calls for creation of zinc smelter group to boost pricing power

* Zinc smelters purchase team would mirror existing copper group

* China zinc concs treatment charges have slumped to a 2-yr low

* Annual TC benchmark usually set by Teck Resources and Korea Zinc

Nov 10 (Reuters) - An executive from China Minmetals Corp on Tuesday called for the creation of a Chinese zinc smelters group - along the lines of an existing collective for copper - to negotiate with miners on concentrate supply and pricing.

Xu Jiqing, general manager of China Minmetals Nonferrous Metals Co, proposed setting up the China Zinc Smelters Purchase Team (CZSPT) as a “new panel for negotiation” and forming a pricing system, without providing further details.

“Stability of production could be guaranteed,” Xu said at the China International Lead and Zinc conference in Chengdu.

Such a group would be a zinc equivalent of the China Smelters Purchase Team (CSPT) in copper - a group of 12 smelters that meets every quarter to set floor treatment charges (TCs) for copper concentrate and presents a united front ahead of annual negotiations with miners.

China is the world’s top producer of refined zinc but has no body to set floor zinc concentrate TCs, which smelters charge to process ore into refined metal. The annual TC benchmark is usually agreed between Canadian miner Teck Resources and smelter Korea Zinc.

The 2020 benchmark was set at $299.75 a tonne in March, the highest in 12 years, but spot rates AM-TC50-ZNCON have since plunged to just $95, the lowest since September 2018 amid coronavirus-related mining curbs, sharply reducing smelters' revenue.

“We want to build a healthier market,” said one Minmetals source familiar with the CZSPT proposal, adding that the idea was for Chinese smelters to set the zinc TC benchmark in future. “We’re just thinking now - we need more smelter support.”

Minmetals operates at both ends of the zinc supply chain. It mines zinc ore in China, where subsidiary Zhuzhou Smelter Group Co is the biggest zinc smelter. Another Minmetals unit, Melbourne-based MMG Ltd, where Xu is on the board, owns zinc mines in Australia.

Spokesmen for Minmetals and Zhuzhou Smelter Group were unaware of the CZSPT plan. (Reporting by Mai Nguyen and Tom Daly, editing by Louise Heavens)