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The Trafigura Group, one of the largest commodity trading companies in the world, informed Chinese smelters that they will not receive zinc shipments from the Castellanos mining project in Cuba due to the sanctions imposed by the Trump administration on the island.
According to sources familiar with the matter, who requested to remain anonymous, the company informed buyers that it will replace those shipments of semi-processed zinc concentrates with other sources of raw material.
"Trafigura acquires concentrates from various sources and continues to supply its clients while complying with applicable sanctions," stated a company spokesperson in a statement reported by Bloomberg.
The multinational company, registered in Singapore but headquartered in Geneva, Switzerland, holds a 49% stake in Castellanos through the joint venture Emincar SA, established with the Cuban government in 2016, although it is not the operator of the mine.
The mine, located in the province of Pinar del Río, has the capacity to produce 100,000 tons annually of zinc concentrate and 50,000 tons of lead concentrate, with all volumes intended entirely for China.
The interruption is another sign of the tensions faced by the Cuban economy as the Trump administration intensifies its efforts to force a regime change. Fuel imports have come to a halt following the U.S. blockade on shipments from Venezuela and other suppliers, and international companies are looking to reduce their exposure to risk.
Last Thursday, Miguel Díaz-Canel and members of his family were subjected to a new wave of sanctions, along with the Cuban armed forces, their internal surveillance network, and the company Minera La Victoria S.A.
The suspension of operations by Sherritt International at its nickel mine has dealt a severe blow to an economy already deprived of foreign currency, and hotel chains such as Iberostar and Meliá have ceased operations on the island in recent days.
As of the date of the news, the Castellanos mine has not been subject to direct sanctions from Washington, which continues to expand the existing measures against the Cuban regime. The joint venture Emincar SA did not respond to calls from Bloomberg.
In the global market, the absence of Cuban volumes would have a minimal impact on its own. However, Chinese zinc smelters are already facing a historic shortage of raw materials due to disruptions in supply from Iran and Russia, which exacerbates the effect of this new interruption.
According to the pricing agency Fastmarkets, zinc concentrate smelting costs fell to a historic low of -50 dollars per ton at the end of May, reflecting the increasing competition for the raw material.
Zinc has surged by nearly 13% on the London Metal Exchange so far this year, and last week it reached its highest level in almost four years before moderating some of the gains.
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