LONDON/SEOUL April 2 (Reuters) - Canadian miner Teck

Resources ( TECK ) has agreed to pay Korea Zinc $165 per metric ton, a

three-year low, to turn its zinc concentrate into refined metal,

according to two sources familiar with the matter.

Known as treatment charges (TCs), the fees paid for

converting raw materials into zinc metals fall when mine output

decreases as smelters have to compete for concentrate.

Korea Zinc declined to comment. Teck Resources ( TECK ) said it "does

not comment on commercial negotiations".

Teck and Korea Zinc are major players

in the market for zinc used to galvanise steel for the

construction industry.

Their annual agreement on yearly processing charges that

miners pay smelters, for supply from Teck's Red Dog mine in

Alaska, is often used as a benchmark by the industry.

The fee Teck has agreed with Korea Zinc has dropped 40% from

$274 per ton last year and is the lowest since 2021.

Low zinc prices in recent months have led to mine

closures, including Boliden's Tara operation in

Ireland. Major mines like Glencore's ( GLCNF ) McArthur River

zinc and lead mine in Australia also recently suspended

operations due to extreme weather conditions.

Korea Zinc, the world's biggest producer of both zinc and

lead, bulk buys concentrate for a group of smelters including

Seokpo, operated by Young Poong Corp, this year.