By Pratima Desai and Clara Denina
LONDON (Reuters) -Newmont has declared force majeure on deliveries of some metal products from its Peñasquito mine in Mexico, the U.S.-listed miner told Reuters, citing strike action as a constraint on output.
Peñasquito is a major producer of zinc and lead, as well as gold. In a February outlook, Newmont said Peñasquito was expected to produce between 190,510 and 208,654420 metric tons of zinc this year and 77,111 and 86,183 tons of lead.
Companies declare force majeure when unexpected circumstances prevent them from meeting contract obligations.
"Due to interruptions in production caused by the union strike at Newmont's Peñasquito mine in Mexico, force majeure has been declared with certain customers for some of the mine's products," Newmont said in an emailed statement.
On June 7, the National Union of Mine and Metal Workers of the Mexican Republic notified Newmont of strike action demanding an increase in the profit-sharing benefit provided for in the Collective Bargaining Agreement (CBA) from 10% to 20%, the company said.
"We remain in a constructive dialogue with the union and the authorities participating in the mediation process," it said.
Peñasquito is a major employer in the area, with a direct workforce of over 5,000.
Governments and workers have become more vocal in demanding a share of mining company profits as commodity prices increase.
Worries about zinc supplies and the potential for tightness due to production cuts have boosted zinc prices on the London Metal Exchange, which at around $2,420 have gained more than 7% since the end of May.
Swedish miner Boliden last week said it will suspend production at Europe's largest zinc mine in Ireland within the next month because of "unsustainable financial losses".
It was also forced to halt output at its largest production unit, the Ronnskar smelter in Sweden, after a fire broke out overnight.