One more project halted/closed.
Zinc mine construction is stopped halfway, because of low zinc-price.
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Low zinc price sinks Burkina Faso mine project
July 17, 2008, 1:29 pm
SYDNEY, July 17 (Reuters) - Plans to dig West Africa's first zinc mine in impoverished Burkina Faso have been scrapped due to funding problems linked to depressed zinc prices, the project's Australian owner, Aim Resources (ASX: AIM.ax) , said on Thursday.
Aim held an agreement to ship 45,000 tonnes of concentrate a year to Brazilian metals group Votorantim once its Perkoa mine started up, and it had also sought to supply other firms such as Xstrata Plc XTA.L in Spain and Boliden BOL.ST in Sweden.
"Current zinc prices and forecasts have made funding difficult for zinc projects and a downturn in both debt and equity markets has also significantly reduced financing opportunities," Aim said in a statement.
Construction work started more than a year ago on the mine, which was tipped to become the single-largest contributor of gross domestic product to Burkina Faso, one of the world's poorest countries.
Aim shares lost 35 percent of their value on Thursday, trading at A$0.031 at 0321 GMT.
London Metal Exchange-traded zinc MZN3 dropped almost 3 percent overnight to $1,795 a tonne and has lost over 20 percent of its value since January as supply outpaces demand. Most analysts predict the market to remain solidly in surplus.
Canada's Teck Cominco Ltd TCKb.TO said on Tuesday it was closing its Lennard Shelf zinc mine in Australia next month as lower prices had made it uneconomical to run.
au.biz.yahoo.com
The question is will Merlin need to do the same?
I don't see zinc going up much. We know that the production costs are around this level but mostly all companies have product mix, so they are earning profit on copper but losing on zinc and that means that they will not close the zinc mine immediately. Also the Chinese miners probably can't just close the mine due to the Government. And the recent cuts mean that if the price of zinc rises again they have the capacity to raise the production again.
The price of zinc will probably fluctuate at this level for the next months. The surplus is still here. The numbers for next year are very big. I noticed first articles saying deficit in 2010 and some in 2011. If the recession picks up in the next months the demand for zinc will go down. We will see how quick the world can come out of this current “mess”. |
