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The US Office of Foreign Assets Control added Cuban state mining company Geominera, the partner of Trafigura in the joint venture running the country’s second-largest mine, to its special designated nationals on June 23.
This latest round of sanctions tightens the noose on Emincar, the 51/49 joint venture between Trafigura, the Singapore-based commodity trading powerhouse, Geominera and the only foreign-invested mine in Cuba that Ofac hasn’t directly targeted yet.
Emincar runs the Castellanos zinc mine in western Cuba. The mine started production in 2018, after an initial investment of €235mn. Operations at the mine are currently suspended, several local sources told fDi Intelligence in late May and early June, as the combined effect of the country’s embargo and tightening US sanctions are preventing export-oriented industrial endeavours like Emincar from running continuous operations.
This is bad timing for both the zinc and lead concentrate markets which are currently tight
Castellanos’s suspension further constrains an already tight global zinc supply. “This is bad timing for both the zinc and lead concentrate markets which are currently tight,” Jonathan Leng, Principal Analyst for Zinc Markets at Wood Mackenzie told fDi in early June.
Castellanos can produce up to 100,000 tonnes of zinc concentrate and 50,000 tonnes of lead concentrate per annum. All its production is exported via the Port of Mariel to Chinese smelters. The country has imported $697.6mn worth of zinc concentrate from Cuba since 2018, according to World Bank figures.
Zinc prices are up by about 11 per cent, year to date, in the commodity market.
In May, Ofac blacklisted Moa Nickel, a 50/50 JV between Canadian Sherritt and state-owned General Nickel Company running the Moa nickel mine; earlier in June, it added Minera la Victoria to the list — a 50/50 JV between Australian Antilles Gold and the same Geominera developing a new gold mine. Both operations are now also on hold.
Following an executive order on May 1, the US government has targeted Cuba’s main sources of foreign currency — mining and tourism — to put pressure on the regime in Havana and force economic reforms. Like mining, international tourism has ground to a halt, with foreign hotel operations severing ties with Gaesa, the blacklisted state conglomerate that was running most tourist operations in the country.
Trafigura declined to comment for this story.