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Toho Zinc Raises Lead Surcharge by 50% for Buyers in Japan

March 11 (Bloomberg) -- Toho Zinc Co., a Japanese non-ferrous metal smelter, said it raised fees on lead sales by 50 percent for the year starting in April, increasing costs for battery makers.

The Tokyo-based company, which is Japan’s biggest refiner of lead and second-biggest of zinc, pushed the surcharge buyers pay over the London Metal Exchange’s cash price for lead to the highest level in at least 20 years, said Kimiyasu Marusaki, who oversees sales of the metal. He declined to disclose the fee, which also includes delivery costs, or identify affected customers.

“The increase is in line with a jump in U.S. premiums,” Marusaki said in an interview on March 8. Fees in the U.S. rose as prices of raw materials and scrap batteries jumped, while some producers also closed operations, tightening supply, he said.

Buyers in the U.S. are paying 14 cents per pound more than the LME’s cash price for lead, according to Metal Bulletin Plc data. The premium in Europe this year almost doubled from 2012 to 100 euros ($130) to 150 euros a metric ton, four traders with direct knowledge of the sales said in January.

Lead for delivery in three months on the London Metal Exchange fell 0.3 percent to $2,206.25 a ton at 4:51 p.m. Tokyo time, while zinc was down 0.3 percent at $1,969 a ton. Shares of Toho rose 0.3 percent to close at 390 yen today.

Toho said in October that it would produce 92,000 tons of lead and 91,000 tons of zinc in the 12 months ending March 31. Marusaki said the target remained unchanged and that Toho would announce plans for the next half year in early April.

The company shut its Chigirishima lead smelter in Hiroshima for 20 days for scheduled maintenance on March 3, Marusaki said.

There are no plans to suspend operations at the Annaka and Onahama zinc smelters, which were halted for at least two months last year after Tokyo Electric Power Co. raised electricity rates for some big users by an average of 17 percent.

The Annaka smelter has an annual capacity of 139,200 tons of zinc, according to the company. The Onahama plant processes two-thirds of the zinc concentrate required by the Annaka smelter.

To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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