SCOTTSDALE, Ariz.—The general manager of zinc oxide producer Zochem Inc. said the Chapter 11 bankruptcy petitions filed by it and its parent company will have “virtually no impact” on its operations or ability to supply its customers.
One reason for that is Zochem on its own is profitable and has not been sourcing zinc from its Pittsburgh-based parent Horsehead Holding Corp., according to Joshua Belczyk, GM of Brampton, Ontario-headquartered Zochem.
“We source our raw materials from third parties, which we always have,” Belczyk said at the International Zinc Association's Zinc Oxide Conference, held Feb. 23-24 in Scottsdale, Ariz.
He said that was because in the past, Horsehead produced only prime western zinc, and Zochem uses only special high-grade zinc. Even when Horsehead began producing some of that grade zinc at its troubled factory in Mooresboro, N.C., Belczyk said so little was produced that it all was earmarked for other customers.
Horsehead Holding and three of its subsidiaries—including Zochem—filed voluntary Chapter 11 petitions Feb. 2 for protection under the U.S. Bankruptcy Code. Horsehead in its filing listed liabilities of $544.7 million and total assets of $1 billion.
In its filing, Horsehead blamed much of its financial difficulties on falling metals prices along with problems ramping up production in Mooresboro. The company said startup costs for the zinc facility—opened in 2014—rose to about $550 million, while during the third quarter of 2015 it operated at just 23 percent of full capacity.