Teck, tariffs, and the Red Dog zinc mine

North of 60 Mining News - 
Shane Lasley, Mining News 

| May 01, 2025

The escalation of tariffs and counter-tariffs may impact the final destination of critical minerals-enriched concentrates from the Red Dog zinc mine in Northwest Alaska.

Teck's Red Dog mine accounts for roughly 5% of the global zinc supply.


Having zinc concentrates frozen in Northwest Alaska offers Teck time to see if trade relations thaw before the Arctic ice.

Teck Resources Ltd. CEO Johnathan Price says the diversified Canadian miner's portfolio of American mining operations delivering metals critical to 21st-century energy and technologies are well-positioned to weather a geopolitical storm that threatens to hobble the global economy, fuel inflation, and disrupt supply chains.

Jonathan Price

"Despite these headwinds, we believe that the fundamentals for our key metals, copper and zinc, are robust over the medium and long term as several macro factors continue to drive demand," he informed analysts and investors during an April 24 earnings call. "These metals are essential for global manufacturing and development, industrial policy and national security, electrification infrastructure, as well as the growth of the digital economy."

While the market dynamics for copper and zinc help galvanize Teck as it navigates the uncharted waters of an escalating international trade war, the Canadian mining company must maintain a vigilant lookout for escalating tariffs, resource nationalism, and other trade hazards as it delivers copper, zinc, and other metals to safe ports of call.

"Although the situation is fluid and evolving rapidly, we do not expect announced tariffs to materially impact our business," Price told shareholders and analysts. "That said, a global trade war could weigh on global economic growth with potential implications for metals demand."

Even with the potential for cooling demand, Teck does not see any shortage of buyers for the germanium- and silver-enriched zinc and lead concentrates produced at Red Dog. However, tariffs and counter-tariffs may impact where the metals produced at the world's largest zinc-producing mine are shipped.

With the port that delivers Red Dog concentrates to international markets locked in ice until June, Teck executives have time to finalize the destination of the metals produced at the Northwest Alaska mine as it waits for Arctic shipping lanes – and hopefully international trade relations – to thaw.

"Fortunately, at this time of the year, given the shipping seasons at Red Dog, we're not moving material from the site," the Teck CEO said. "So, we're pretty well covered at present."

Alaska Industrial Development and Export Authority
The offshore conveyor for loading Red Dog concentrates extends into a frozen Chukchi Sea.

Strategic zinc in a tight market

While Red Dog is an American mine, best known for delivering concentrates to Teck's Trail refinery in British Columbia for processing, the U.S.-Canada trade conflict, aggravated by President Trump's tariffs, is not the shipment issue for the Northwest Alaska zinc-lead-silver-germanium mine.

Instead, the escalating reciprocal tariffs between the U.S. and China have Teck reassessing destinations for Red Dog concentrates.

Nearly 20% of the metal concentrates produced at Red Dog are typically shipped to China for processing. The escalating tariffs, counter-tariffs, and export restrictions, however, could take the Middle Kingdom off the list of potential buyers for 2025.

Given the tight zinc markets and relations Teck has built with other Asian nations, striking China from the list may be more of a ship rerouting exercise than a problem with metals-laden ships with nowhere to go.

Teck estimates that there is only enough zinc stockpiled in warehouses to meet six days of global demand for this metal essential to auto manufacturing, renewable energy, transportation infrastructure, construction, and other sectors of the economy.

On average, over the past 25 years, warehouses have held enough of this galvanizing metal to last about 18.7 days. Having less than a week's worth of zinc stockpiled leaves an extremely tight margin for error in the event that supplies already having a tough time keeping up with demand are disrupted.

While Teck expects that the global trade war and associated inflation will cool the demand for zinc, production of this galvanizing metal is also falling.

Currently, there is only enough zinc being mined to meet about half of the global smelter capacity, which has resulted in smelting companies lowering what they charge to upgrade concentrates into useable metals.

In early April, Korea Zinc agreed to discount the fee it charges Teck for refining zinc concentrates from Red Dog and other mines by 40%.

Considering that Red Dog has traditionally accounted for roughly 5% of the global zinc supply, the fee for smelting concentrates from this mine is often considered a benchmark for the sector.

The lowered charges are a sign that Korea Zinc needs more concentrates for its smelter and would welcome some of the shipments redirected from China.

"Over the past few years, we have successfully developed a regionally diverse customer base, which gives us greater optionality while trade negotiations are ongoing," said Price. "Red Dog is a highly valued concentrate in the zinc market, and we have several longstanding customers for this product."

NANA Corp.

Red Dog metals dodge tariffs

While the trade war may impact Red Dog zinc shipments bound for Asia, concentrates sent to Teck's Trail Operations in B.C, as well as the metals sold back to the U.S., are not impacted due to being covered under the United States-Mexico-Canada trade agreement (USMCA).

"Refined zinc, lead, and specialty metals such as germanium, indium, and sulfur products are sold into the U.S., but they are exempt from U.S. tariffs as they are compliant with the USMCA," Price said, referring to the metals produced at Trail.

Considering that Red Dog metals must cross the U.S.-Canada border twice – first in a concentrate bound for Trail and then as refined metals delivered to U.S. markets – this exemption is good news for Teck and its Alaska mine.

However, the tariff exemption may be even better news for American manufacturers, which will have a source of zinc, lead, silver, germanium, and indium sans tariffs.

Germanium, indium, and zinc are on the list of minerals critical to the U.S., and the demand for silver is on the rise due to its use in solar panels and electronic devices.

Having a secure and reliable supply of germanium and indium is especially important to American manufacturers, considering that China banned exports of these tech metals to the U.S.

China produces 70% of the world's indium, a rare metal used as a transparent conducting film applied to virtually every smartphone and computer touchscreen on the market, which leaves high-tech manufacturers with limited options.

China is also a significant supplier of germanium needed for modern communications, modern chipmaking, military thermal imaging devices, and infrared imaging systems for driver assist and autonomous vehicles.

www.theodoregray.com

China's export bans have limited supply and increased prices for germanium and indium.
Trail capitalizes on tech metals

Teck's Trail Operation is one of the most significant producers of germanium and indium outside of China.

The Southern B.C. refinery produces six different germanium products tailored for fiber optics, high-speed computer chips, quantum computer transistors, solar cells, light-emitting diodes (LEDs), night vision goggles, and other high-tech applications.

Trail also produces 99.995% pure indium metal and has expanded its capacity to meet the growing demands of indium-tin-oxide for touchscreen devices.

China's germanium and indium export bans are boosting Trail's bottom line.

In addition to pushing up the price of these specialty metals, Teck is incentivized to produce more of them.

With the market for minor metals like germanium and indium being limited, refineries typically only recover enough to meet market demands. Recovering all of these byproduct metals contained in zinc, lead, copper, and other concentrates would oversaturate the market, driving down prices and making the recovery uneconomic.

With the largest critical minerals-producing country cutting off supplies to the U.S., Teck has the opportunity to optimize byproduct indium and germanium production at Trail and sell into an American market without being penalized by tariffs.

As a result, Trail profits soared to $58 million (C$80 million) during the first quarter, more than triple the $18 million (C$25 million) realized by the refinery a year ago.

"At Trail Operations, we generated strong profitability in the quarter, reflecting increased production of byproducts such as silver, germanium, and other critical metals, as well as the successful implementation of initiatives to improve profitability and cash flow generation," Teck Resources CFO Crystal Prystai informed analysts and investors.

Teck Resources Ltd.
Teck"s Trail refinery in B.C. produces zinc, lead, silver, germanium, indium, and other specialty materials.

Road to Red Dog's future

The tariffs and resource nationalism stemming from the ongoing trade war have increased the strategic value of having a globally significant supply of zinc, silver, and germanium on American soil.

The world-class orebodies that have fed the mill at Red Dog for the past 35 years, however, are nearly depleted – raising concerns about whether this Northwest Alaska mine can continue to be a significant supplier of critical metals moving forward.

Teck estimates that there are currently enough reserves at Red Dog to keep the mine in operation until 2031. With the quality and quantity of ore dwindling, the company says metals production is slated to plummet dramatically starting this year.

Fortunately, Teck has discovered two enormous zinc-lead-germanium-silver deposits on state land about 10 miles northwest of the current operation that could keep the mine in operation deep into the 21st century.

Teck had hoped to be further along in delineating and developing these deposits, but delays in issuing federal permits needed to build a 12-mile road to access them have slowed progress.

The U.S. Army Corps of Engineers finally issued the road permits last December, and Teck has redoubled its efforts to establish the road and complete the work necessary to ensure that mining these deposits can be done sustainably and economically.

If these efforts are fruitful, the U.S. and its allies will have a secure and reliable supply of zinc, silver, and germanium for decades to come. If not, the destination of critical minerals-laden Red Dog concentrates will not be a concern if the specters of tariffs, resource nationalism, and trade wars arise in the future.


Author Bio
Shane Lasley, Publisher   

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.