Metalnewsnet 4 Mar :

Zinc mining and smelter firms have agreed to 2010 processing fees of 12.5¢/lb atop a projected annual average London Metals Exchange (LME) base price of $1.13/lb.

The agreement for the so-called TCs, or treatment charges, will be an increase of almost 40% from last year's rate, Reuters is reporting from the annual International Zinc Association conference in Scottsdale, Ariz.

These annual treatment charges are the fees paid by miners to smelters to turn concentrate into finished metal and benchmark terms typically are set at or around the time of the zinc industry meeting. The benchmark deal this year reportedly has been struck between Canadian miner Teck Resources and smelter firm Xstrata.

In 2009, the processing fee was an average 9¢ over a projected base price of 63¢, or 72¢. The actual spot average for the year ended up at 75¢ so the smelters made money on the TCs arrangement.

LME zinc prices have been volatile already this year and averaged $1.04 for the first two months with the consensus forecast of a $1.10 average for all of 2010. So, the agreement may end up benefiting the miners if spot prices stay as high as forecast.

 (From Purchasing)