October 14, 2008 / 9:26 AM / 11 years ago

FACTBOX-Major zinc mine cutbacks and closures

Oct 14 (Reuters) - Rising costs and falling prices have forced a growing number of zinc miners to announce cost-cutting measures, cutbacks or even closures at high-cost operations.

Other producers have delayed projects or said the future of their operations is under review.

Below are details of the major announcements which have been made in recent months.

Oct 9 - Strategic Resources Acquisition (SRA) SRZ.TO said it would be initiating a temporary care and maintenance programme at its wholly-owned Mid-Tennessee zinc mining complex (MTZ). The company said that since production began at the Gordonsville mine in April 2008, cash costs per pound of payable zinc had been well above prevailing commodity prices.

Sept 26 - The Galmoy zinc-lead mine in Ireland, owned by Lundin Mining (LUN.TO) will begin a three-year phased shutdown in December, a union spokesman said. The mine produces about 70,000 tonnes of zinc metal.

September 18 - Australian miner OZ Minerals Ltd (OZL.AX) said it plans to cut zinc production at its Golden Grove mine in Australia by 35-40 percent in 2009 as prices tumble, instead upping output of copper. The company said it plans to cut zinc output by 50,000 tonnes in 2009.

September 8 - Intec Ltd INL.AX said it had suspended operations with immediate effect at its Hellyer Zinc Concentrate Project, citing several reasons including low zinc prices and rising production costs.

August 29 - Angus & Ross Plc ANGR.L said it has delayed further construction at its Black Angel mine in Greenland until next year, due to delays in securing project financing.

August 25 - Blue Note Mining BN.TO said it is deep into the process of cutting costs at its Caribou lead-zinc mines in Canada. The company will reduce its workforce from 370 during the first half of 2008 to 300 in the second half of the year. Costs will also be cut through other measures such as optimisation of production activities.

August 21 - HudBay Minerals Inc (HBM.TO) said it is closing the Balmat, New York zinc mine and concentrator on Aug 22 because of low prices for the metal. The mine, which restarted in January 2007, was earlier expected to produce at around full capacity of 60,000 tonnes per year (tpy) of contained zinc in 2008.

August 21 - Australia’s Perilya Ltd PEM.AX said it will cut its zinc production by almost half in the face of low metals prices and will wait for a rebound in the commodities cycle before resuming full operations. Mining of ore this year from the firm’s Broken Hill deposit will almost halve to 950,000 tonnes, a level forecast to yield 55,000 tonnes of contained zinc compared with 91,000 tonnes a year earlier.

August 14 - Strategic Resources Acquisition Corporation said in its third quarter results that, as at June 30, 2008, its mining operations were not profitable near term on a sustainable basis. This assessment was based on results of mining operations, including costs of mining and recoveries and prevailing zinc and zinc concentrate prices. The company said it needed to raise additional financing and/or refinance its short-term debt to enable it to remain in operation beyond October 2008. SRA revised its production forecast for calendar 2008 to about 25 million lbs of payable zinc versus previous estimates of about 100 million lbs, citing delays and lower than expected productivity and mill recovery during production ramp-up.

August 7 - Lundin Mining announced in its second quarter results a $152.7 million impairment charge on its Aljustrel zinc mine in Portugal. The company said it was reviewing its options for the mine and said there could be further impairment charges. It expects to make a decision on the mine’s future before the end of the third quarter. Options include a possible early extraction of known copper resources at the site. Aljustrel is in start-up mode and produced less zinc than expected in the quarter.

July 17 - Australia’s Aim Resources AIM.AX said plans to dig the Perkoa zinc mine in Burkina Faso have been scrapped due to funding problems linked to depressed zinc prices. At full capacity the mine would have produced around 82,000 tpy of zinc in concentrate.

July 14 - Teck Cominco Ltd TCKb.TO said it would close the Lennard Shelf lead-zinc mine in western Australia in August. The company said rising costs, lower prices and a stronger Australian dollar had made it uneconomical. The mine, which was brought out of care and maintenance in early 2007, had been scheduled to remain in operation until 2011. Mine had been expected to produce around 70,000 to 80,000 tpy of contained zinc.

Sources: Reuters, Reuters Metal Production Database (MPD), company results.

Compiled by Karen Norton; edited by Peter Blackburn

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