Zinc prices are at their highest level in nine years, but executives at the two Alaska mines where the widely used metal is produced appear more wary than giddy.
The market rally that started in early 2016 is a bright spot amid Alaska's economic slowdown. The Red Dog Mine in Northwest Alaska, one of the world's largest producers of zinc, and the Greens Creek Mine in Southeast, a silver producer that also extracts smaller amounts of zinc, have seen prices rise from around $1,500 per ton a year ago to about $2,600 per ton in early December 2016.
The price increase of roughly 73 percent is due to both a supply dip and demand surge.
Swiss commodities giant Glencore cut zinc production late last year with an eye toward bringing prices back up. Two large, depleted zinc mines, the Lisheen Mine in Ireland and the Century Mine in Australia, made their final shipments this year.
Zinc is used in sunscreens and fortified cereals, but its most common use is as a protective coating to keep steel from rusting. Treated in a molten zinc bath, the steel is known as "galvanized," and demand for it has grown, with China moving forward on a $36 billion rail network from Beijing to nearby cities and speculation that President-elect Donald Trump will make good on his campaign promise of federal financing for big infrastructure builds.
The Red Dog Mine sells its zinc under contracts that are flexible enough to allow the company some additional returns from elevated prices. But Lance Miller, vice president for natural resources at Alaska Native corporation NANA, is not celebrating just yet.
"The highs don't last. Everybody knows it," Miller said. "In the past, these high prices may be on the order of a year or two or just months."
Gross profit for Red Dog was $600 million in 2015 and Miller anticipates the figure will rise, but whether that will mean bigger dividends for NANA shareholders, he said, "We don't go there. It's dangerous to speculate because prices tomorrow could plummet. Who knows?"
NANA owns the land north of Kotzebue where the Red Dog Mine is located. The mine's operator is Teck Alaska, a subsidiary of Vancouver, Canada, natural resources conglomerate Teck Resources.
Teck spokesman Wayne Hall revealed little about how prices might affect the mine over both the short and medium terms, only saying that Red Dog always aims to maximize efficiency and productivity, "regardless of month-to-month fluctuations in zinc prices."
Hall said overall zinc production at Red Dog for 2016 will be close to 665,000 tons, up from 567,000 tons in 2015.
Red Dog opened in 1989 and employs more than 600 full-time employees at the mine site and has no immediate plans to alter jobs numbers. Zinc exploration at the Noatak project on state land west and north of Red Dog continues as planned, Teck Resources president and CEO Don Lindsay said in a third-quarter earnings call this year.
Likewise, Mike Satre, manager of government and community relations for the Greens Creek Mine, said high prices will not spur immediate changes to zinc production or exploration. The mine, on Admiralty Island near Juneau, draws 23 percent of its revenue from zinc.
"In the short term, price has no direct impact," Satre said. "If it looks to be sustained over time, the board can look into additional capital expenditures and exploration decisions."