UPDATE 1-Rains cut Australia Century zinc mine output
uk.reuters.com
Wed Apr 29, 2009 1:48am BST
* Bad weather cuts Century zinc mine Q1 output 1.8 pct * Production costs exceeding zinc price (Adds details)
SYDNEY, April 29 (Reuters) - Zinc output at Australia's Century mine fell 1.8 percent to 101,961 tonnes in the first quarter due to the heaviest rains in a decade, owner OZ Minerals Ltd (OZL.AX) said on Wednesday.
OZ, which is being taken over by Chinese state-owned metals firm Minmetals in an $850 million deal, said production costs at Century averaged about US$0.75 per pound in the quarter, versus a three-month London Metal Exchange average of around US$0.53.
OZ has previously said it will reduce production at the mine by 4 percent overall in 2009 to combat slowing demand for the anti-corrosive metal from steel makers. The mine produced 125,333 tonnes in the previous quarter.
The cut represents just a quarter of one percent of world output, and would do little to combat crippling supply gluts, according to analysts.
The global zinc market was in surplus by 56,000 tonnes in the first two months of 2009, the International Lead and Zinc Study Group said this month.
LME zinc stocks ballooned 36 percent, or 93,000 tonnes in the Jan-March quarter to 345,000 tonnes, roughly 12 days of global consumption of the metal, used in galvanising steel.
OZ said Chinese metals imports had picked up during the quarter, lending some price support.
"Underlying demand has shown signs of improving, but global metal consumption is generally considered to be 10-15 percent lower year on year," it said.
Contained zinc output from OZ's Rosebery mine fell 2.5 percent to 20,829 tonnes.
Zinc production from the Golden Grove mine tumbled 65 percent to 20,586 tonnes, which was in line with previously announced plans to shift to higher copper production at the mine. Copper output more than doubled 7,012 tonnes.
Copper production from OZ's Sepon mine in Laos rose 6.6 percent to 17,217 tonnes in the quarter.
OZ Minerals also said it is in talks with banks to further extend a debt repayment deadline to June 30 to allow time to allow the sale to Minmetals go through. (Reporting by James Regan, editing by Jonathan Standing)
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