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Gold/Mining/Energy : Breakwater Resources (T.BWR)

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To: JAS who wrote (600)	2/19/1999 6:38:00 PM
From: Giraffe	Read Replies (1) of 962

www.ft.com Feb 17 ZINC: Analysts raise deficit estimates By Gillian O'Connor Mining Correspondent Metals analysts are increasing their estimates of the probable zinc supply deficit, following last week's announcement of the temporary closure of the Italian Crotone smelter. "Zinc fundamentals remain best of all base metals," said Flemings after last week's announcement that the Crotone smelter was being closed for refurbishment. Several other analysts have taken the same line. Zinc prices have risen by a tenth in the past few weeks. Yet all agree there is considerable doubt about what is actually happening at Crotone, whose fate is a politically sensitive issue for the Italian government. Ted Arnold of Prudential Bache said: "The Crotone plant in southern Italy has closed down while the new owners undertake rehabilitation and expansion work. They are doubling the size to 200,000 tonnes a year of zinc metal. A shutdown of 18 months is possible." Many industry watchers say it could take three years to complete the project. Privately, many suggest the smelter will never reopen but add that it would be politically unacceptable for the owners or the Italian government to admit this. Crotone is in Calabria, where unemployment is high. Industry watchers say when the Switzerland-based metals trader Glencore bought the Porto Vesme business from Eni, the Italian state-controlled energy company, late last year, it refused to buy Crotone. But in the short term analysts are reworking their supply/demand sums, assuming that Crotone's output of about 70,000 tonnes a year can be taken out of the equation for the next two or three years.

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