December 2, 2008 / 9:30 AM / 10 years ago

UPDATE 1-China Zhongjin lead/zinc output not hit by dispute

(Adds details, production forecasts)

By Alfred Cang and Rujun Shen

SHANGHAI, Dec 2 (Reuters) - A labour dispute at Shenzhen Zhongjin Lingnan Nonfemet Co Ltd (000060.SZ), China’s third-largest zinc producer, has been resolved and has not affected output, company officials said on Tuesday.

“There was no impact on output,” an executive at Shaoguan Smelter, the state-run company’s only smelter and site of the dispute, told Reuters by telephone.

The executive added that the dispute, which broke out on Monday, had not occurred during working hours.

An official with the listed company’s investor relations office confirmed there was no impact on production.

The smelter executive, who declined to be identified due to the sensitive nature of the topic, said some contractors had protested against changes in the renewal process for their employment contracts. The changes were subsequently dropped.

About 400 workers gathered near the plant on Monday to protest, blocking traffic for nearly two-and-a-half hours, the semi-official Chinanews.com website reported on Tuesday.

The executive said the company expected to produce 335,000 tonnes of zinc and lead combined in 2008, comprising more than 220,000 tonnes of zinc and more than 110,000 tonnes of lead.

That is slightly below its initial plan for the year, due to the impact of severe snowstorms early in the year, the executive said.

It plans to produce 350,000 tonnes of zinc and lead combined in 2009, of which around two-thirds will be zinc, the executive added.

Hit by plunging prices and shrinking margins, China’s major zinc and lead smelters, including Zhuzhou Smelter (600961.SS) and Huludao Zinc (000751.SZ), have slashed output as they battle weak demand at home and abroad.

A trade source at Zhongjin Lingnan has said that the company had no plan to cut production but had delayed construction of a 100,000 tonne-per-year zinc facility. (Editing by Edmund Klamann)

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