Peru: Cajamarquilla zinc smelter suspension keeps market on edge after last week’s fire

• LME zinc touches highest level since Aug’22 on supply disruptions
• Clarity on restart timeline awaited at Latin America’s largest zinc smelter

Market attention remained focused on Peru’s Cajamarquilla zinc smelter this week after Nexa Resources suspended operations following a fire incident reported on 13 May, with uncertainty over the restart timeline continuing to support zinc prices globally.

The fire, which broke out at the Cajamarquilla facility near Lima last Wednesday, has since been brought under control. Nexa confirmed that four workers — including one employee and three contractors — sustained injuries and remain in stable condition. No fatalities were reported.

While the company stated that the incident is not expected to have a material operational impact based on currently available information, parts of the smelter infrastructure were damaged and investigations into the cause of the fire are ongoing.

Supply concerns continue to support zinc market

The disruption triggered a strong reaction across global zinc markets, with 3M LME zinc surging to $3,617/t following the incident – the highest level since August 2022, amid concerns over refined metal availability.

Cajamarquilla, the largest zinc smelter in Latin America, produced around 345,300 t of refined zinc in 2025, marking its highest annual output since commissioning. Peru accounts for nearly 10-12% of global mined zinc supply, making operational disruptions in the country particularly significant for the global zinc chain.

A Singapore-based trader said, “The market is reacting less to the immediate outage and more to uncertainty around how quickly full operations can resume, especially given Cajamarquilla’s importance in regional refined supply.”

Market participants noted that while no major physical tightness has emerged yet, sentiment remains bullish amid already constrained global concentrate availability and firm refined zinc demand.

Outlook

LME zinc prices are expected to remain volatile in the near term, with market direction likely to depend on further updates regarding operational recovery at Cajamarquilla and broader global supply trends.