Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : ZINC The base metal. News and Views. Symbol Zn -- Ignore unavailable to you. Want to Upgrade?

To: Ray Hughes who wrote (194)	6/16/1999 9:51:00 AM
From: Stephen O	Respond to of 3270

Asturiana to Create World's Largest Zinc Refinery Madrid, June 16 (Bloomberg) -- Asturiana de Zinc SA, the world's fifth-biggest zinc producer, said it will spend 28 billion pesetas ($175 million) to expand one of its refineries, creating the world's largest zinc processing plant. The investment, to be made over the next two years, will boost annual output at its San Juan de la Nieva plant in northern Spain by 120,000 metric tons to 450,000 tons, making the company the world's second-biggest zinc producer after Australia-based Pasminco Ltd., Asturiana Chairman Santiago Zaldumbide said. Asturiana is trying to meet growing demand for zinc, used as a protective coating for steel in cars and buildings. Asturiana said last month it is considering buying refineries and mines in other countries as well as expanding in Spain. ''It's the longest-term option; the quickest would have been to buy another zinc refinery, but this is the most efficient option because Asturiana's technology is state of the art,'' said Alejandro Vigil, an analyst with Caja Madrid Bolsa. Once the expansion is complete, the Asturiana plant will account for 8 percent of world supply and raise the company's annual sales to 100 billion pesetas in 2002, Zaldumbide said, a 50 percent jump from 1998 sales of 65 billion pesetas. The investment is also a sign of Asturiana's transformation into a cutting-edge zinc producer from a company that returned to profit in 1997 after posting six years of losses because of huge debts and fines for concealing losses in futures trading. Zaldumbide said Asturiana will recover its investment within five years, and it will not need to raise its debt, though it will receive an as-yet undisclosed government subsidy for the project. ''This (expansion) is much more positive than buying another zinc refinery, which would have much lower productivity levels than Asturiana's plant,'' Vigil said. Demand Zaldumbide said he expects world demand for zinc to increase by about 200,000 tons a year during the next five years, while supply is forecast to increase by only about 120,000 tons a year. ''This gives an idea of the magnificent opportunity for Asturiana to expand its plant,'' he said. Barclays Capital minerals economist Kevin Norrish said that forecast might be too optimistic. He estimates zinc consumption will grow at an average annual rate of about 2 percent during the next three years, equivalent to about 150,000 tons a year. Zaldumbide said Asturiana's Reocin zinc mine in Spain will be able to produce zinc ore to feed its smelter only until 2003, though if the company didn't buy a mine before then, it would buy the feed from other mining companies. The expansion will create 250 new jobs at the San Juan de la Nieva plant, plus as many as 1,000 jobs during the construction of the plant and 500 indirect jobs in the region. Asturiana is 45 percent-owned by Switzerland-based trader Glencore International AG, one of the world's biggest trading companies, which yesterday said it bought the Porto Vesme zinc and lead plant in Sardinia, Italy, from Italian energy company Eni SpA for an undisclosed amount. Asturiana shares fell as much as 0.22 euro, or 1.8 percent, to 11.77 euros. --Andy Webb-Vidal in the London bureau (44 171) 330 7743, with Jeffrey T. Lewis and Eduardo Vilades in the Madrid bureau (34) 91 700 9600/cs