SYDNEY Jan 23 Output from Australia's Century
zinc mine, the world's third biggest, could drop 5 percent this
year as it nears the end of its operating life, exacerbating an
emerging global supply pinch.
The mine will yield between 465,000 and 480,000 tonnes of
zinc in concentrate in 2014 against 2013 output of 488,233
tonnes, said Chinese owner MMG Ltd.
The decline comes amid a supply deficit driven by rising
galvanised steel production. Zinc is primarily used as a
rust-inhibitor in the galvanising process.
MMG's nearby Dugald River mine is under development and was
supposed to start yielding zinc in late 2015, partially
replacing lost output from the Century mine, which MMG forecasts
will run dry in mid-2015.
But MMG last month warned Dugald River would miss its start
date due to poor ground conditions.
An additional A$57 million has been allocated to study
problems at the project, according to MMG.
A global hunt is on to find new deposits of zinc as China
buys more of the metal to rust-proof new cars and coat steel
used to build bridges and skyscrapers.
Multinationals such as Glencore Xstrata and
Belgium's Nyrstar, along with MMG are funding new mines
from Africa to the Yukon in search of more metal.
London Metal Exchange zinc prices have tumbled as
much as 19 percent in the last year, but the outlook is turning.
In the last two weeks, the price has gone up by as much as 5
percent and was last standing at $2,076.25 a tonne.
The fourth quarter of 2013 appears to have marked the
beginning of a new cycle in zinc characterized by undersupply,
Morgan Stanley said in a report on Thursday.
"The combination of steady demand growth, declining mined
and refined production, and falling exchange inventories brought
our estimation of the stock-to-usage ratio to its lowest since
2010," it said.
MMG, which operates additional mines in Australia and Laos,
forecast total output of 173,000-186,000 tonnes of copper and
600,000-625,000 tonnes of zinc in 2014.
Total production in 2013 was 187,738 tonnes of copper and
600,221 tonnes of zinc.
(Reporting by James Regan; Editing by Joseph Radford)