Three-month zinc on the London Metal Exchange jumped as much as 6.9% to $3,637.50 a tonne, a level unseen since July 2007.

Nyrstar said it would cut production by up to 50% at its three European zinc smelters from Wednesday.

Electricity prices have reached record highs in recent weeks, driven by power shortages in Asia and Europe, with China’s crisis expected to last through to the end of the year and crimp growth in the world’s second-largest economy.

Click here for an interactive chart of zinc prices

“The cost burden of carbon emitted by the electricity sector which is passed on to industrial and domestic customers, means it is no longer economically feasible to operate the plants at full capacity,” Nyrstar said.

“Indirect cost compensation for energy-intensive producers to protect their competitiveness versus non-EU producers varies by European country and this puts Nyrstar’s Budel, Balen and Auby plants at a competitive disadvantage, compounding the impact of extreme energy prices.”

The firm is the world’s second largest zinc producer and one of the biggest zinc smelting companies. It has operations across northern Europe, the United States and Australia.

Fitch Solutions forecasts an average zinc price of $2,600 per tonne in 2021.

“The global production surplus that emerged in 2020 should persist into the medium term, and the resulting increase of zinc inventories should gradually drag prices lower,” said the research firm in a recent report.

(With files from Reuters)