Zinifex 4Q metal output to rise vs previous quarter
Australian zinc and lead miner Zinifex Ltd.'s (ZFX.AU) fourth quarter production will rise on quarter despite lower output at the company's Budel smelter in the Netherlands, Zinifex's chief executive said Monday.
In the third quarter, Zinifex's zinc production rose 1% on quarter to 159,029 metric tons, while its lead production fell by around 18% to 51,702 tons, because of operational problems at the Port Pirie smelter, CEO Greig Gailey said.
Australia's fiscal year starts on July 1.
Supplies of lead concentrate to Australia's Port Pirie have resumed, Zinifex said, but repairs at Budel in the Netherlands will lower fourth quarter output.
The outlook for the zinc market is firm, based on historically low London Metal Exchange stocks and expected strong demand.
"Zinc supply is increasing but this is necessary to avoid an unsustainable situation and demand destruction," Gailey said in a presentation.
Following a large supply deficit of more than 600,000 tons in 2006 and forecast deficit of nearly 200,000 tons this year, the market balance will swing into a nearly 600,000-ton surplus for next year, Zinifex said.
For lead, supply issues at several mines have pushed the market into deficit, prompting a stock drawdown to critical levels. Supply issues are expected to keep prices at high levels.
Zinifex, which is in the process of combining its smelting and alloying business with Belgium's Umicore SA (UMI.BT) in a deal worth around A$3 billion to form new company Nystar, is keen on expanding its falling reserves.
While focused on its core lead and zinc mining operations, the company will seek to expand its horizon to nickel and niche metals, excluding other base metals and bulk commodities.
The company's project pipeline includes Australia's Dugald River zinc mine that has a minimum mine life of 16 years for production of 200,000 tons zinc per year. If developed, Dugald would raise Zinifex's zinc output by a third from 2011.
Zinifex's newly acquired Wolfden Resources, a Canada-based explorer and developer, could produce 130,000 tons of zinc and 25,000 tons of copper from 2013.
At 0017 GMT, Zinifex shares were up 1.4% at A$18.85.
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