Nyrstar has long been one of the world's top zinc smelters, but found itself facing the prospect of future supply and margin pressures. That prompted a move upstream into direct zinc ore mining, a process that Keith Regan learns also involves rebuilding the trust of employees, communities, partners and regulators.
With interests in Australia, Belgium, the Netherlands, France, Finland, Greenland, Peru and the United States that handle primarily zinc and lead, but also copper, gold and silver, Nyrstar is a significant mining and processing player in a number of markets, but is considered a global leader in the production of zinc.
The listed Belgian company’s portfolio of properties and processing facilities is constantly being reviewed for strategic opportunities and one of Nyrstar’s latest strategic moves involves positioning itself further upstream in the zinc market in the United States.
With the only zinc smelting operation in the US in Tennessee, Nyrstar is no stranger to the zinc market, long serving as a finishing and processing partner to mining companies. Recent market developments, however, prompted Nyrstar to re-enter the direct mining business in Tennessee, says Stuart Gula, general manager of two recently acquired mines.
Gula, an Australian mining engineer, is responsible for overseeing Nyrstar operations at East Tennessee and Middle Tennessee mines, where ore is processed into zinc concentrate that will then be finished at the company’s existing Clarksville smelting facility. East Tennessee is located near Knoxville, and less than 250 miles from Nyrstar's Clarksville smelter, while Middle Tennessee is closer to Nashville and about 100 miles from the Clarksville smelter.
When at full production, the two mines will produce enough zinc concentrate to keep the Clarksville smelter running at full capacity. “We currently have a strategy of upstream integration where smelting and mining will both provide valuable contributions to our earnings,” Gula says. “The acquisition of the Tennessee mines in 2009 is part of our strategy to move upstream into mining.”
Nyrstar has experience in mining zinc, with active operations in Peru, and interests in exploration activities in Greenland, Gula notes. “The company used to be more closely linked to the mining end but the decision was made to move away from that. As often happens, this business moves in cycles and we are back to a point where the benefits of controlling the supply are significant.”
As it brings the existing mines back into full production (the mine at Middle Tennessee had been in bankruptcy) Nyrstar is working hard to rebuild confidence among various constituents, including employees, suppliers, key partners and the communities that host and rely on the mines.
“There have been a number of operators of these mines and their business styles have varied in terms of how committed they were to doing things right,” says Gula. “We have taken a lot of steps to ensure we are giving across a professional and no-nonsense style and approach to our operations right from the outset.”
When fully operational, the two mines will be capable of moving around 5 million tonnes of ore annually, with relatively low grades of 3 to 3.5 percent. “It’s a low-margin, high-volume business, so we want to make sure we set it up right. We have to establish a culture where everybody is involved in the business and everybody is looking at every aspect of the business at all times, so we can find ways to improve those margins,” Gula says.
To support those efforts and its corporate philosophy of “preventing harm,” Nyrstar has brought a number of systems and procedures to the mines, including the use of a Risk Information Management System that enables it to track all safety and environmental incidents or issues.
“There are a number of dimensions around safety, including the behavioral as well as systems and procedures and having a handle on the data is an important foundation for all of it,” Gula says. “As much as we don’t want injuries at all, this can be a hazardous business, and being able to put those that do happen into a database allows us to interrogate when they happened, what shift, what type of work; we can see patterns and get ideas for how to make things better when we can see all that in front of us.”
Safety, he adds, is a company core value, a message that has been driven home to employees and partners alike, many of whom worked with previous mine owners and operators, who may not have had the same level of commitment. The RIMS system also enables Nyrstar to track environmental compliance and work more smoothly and cooperatively with regulators in Tennessee. “We see those regulations as a minimum standard and we want to far exceed them.”
The data collected with the system will also aid Nyrstar’s efforts to become ISO-compliant. “Our goal is to get ISO 14001 certified and this helps get us started down that path,” Gula says.
The Middle Tennessee mine was operating in bankruptcy, and will be back at full capacity by year’s end. Eastern Tennessee was on care and maintenance by previous owners Glencore, which sold the mine to Nyrstar in 2009 for $126 million, and is now operating close to full capacity.
The mines have different dynamics in place, with only about 20 percent of the Nyrstar workers at Middle Tennessee having previously worked there, as previous owners had relied on contractors, while 80 percent of those at Eastern Tennessee—which is located in an area that has been mining zinc since the 19th century—have direct experience in the same mine.
While finding experienced miners has been a challenge, the bigger objective of Nyrstar is to overcome a lack of confidence in the local community. “Past owners have been here today and gone tomorrow,” Gula says. “We have to build confidence that we’re in this for the long-term. One of the things we have aimed to do is stand aside and position ourselves differently from how the mines were previously operated.” That happens by constantly emphasizing the Nyrstar way. “We want people to get involved with the business and we want to give them the comfort and certainty they need to give us their commitment in return. The most important thing for us right now is to rebuild credibility.”
To emphasize its long-term view, Nyrstar assembled a group of two dozen key leaders to develop a five-year strategic plan that starts with the company’s prevent harm policy and builds a picture of the mines’ financial and operational futures. “One of the things that came out that we didn’t realize would happen was that employees could see we were thinking about our strategy out to 2015. We hadn’t fully realized to that point just how much of a stress the up-and-down nature of the business in the past had been on people. Putting that plan on paper really accreted a lot of confidence in and around the place and we want to build on that.”
