Canadian miner Teck Resources has agreed to pay Korea Zinc $165 per metric ton, a three-year low, to turn its zinc concentrate into refined metal, according to two sources familiar with the matter.

Known as treatment charges (TCs), the fees paid for converting raw materials into zinc metals fall when mine output decreases as smelters have to compete for concentrate.

Korea Zinc declined to comment. Teck Resources said it “does not comment on commercial negotiations”.

Teck and Korea Zinc are major players in the market for zinc used to galvanize steel for the construction industry.

Their annual agreement on yearly processing charges that miners pay smelters, for supply from Teck’s Red Dog mine in Alaska, is often used as a benchmark by the industry.

The fee Teck has agreed with Korea Zinc has dropped 40% from $274 per ton last year and is the lowest since 2021.

Low zinc prices in recent months have led to mine closures, including Boliden’s Tara operation in Ireland. Major mines like Glencore’s McArthur River zinc and lead mine in Australia also recently suspended operations due to extreme weather conditions.

Korea Zinc, the world’s biggest producer of both zinc and lead, bulk buys concentrate for a group of smelters including Seokpo, operated by Young Poong Corp, this year.