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

To: jrhana who wrote (476)	5/20/2003 3:47:58 PM
From: Stephen O	Read Replies (1) \| Respond to of 3270

(MB) - Zinc miners 'must adopt a more responsible role' 2003-05-16 17:00 (New York) May 16 (Metal Bulletin) - Miners should adopt a more responsible role in the zinc market and face the reality that mine closures and consolidation are desperately needed if the market is to recover, according to Steve Hayes, director vice president marketing of Canadian miner Breakwater Resources. "As miners we should scrutinise both existing and potential production, in order to make the hard decisions associated with better aligning supply with demand," he told MB's 7th Zinc and Its Markets Seminar in Dsseldorf this week. "In doing so, we will avoid exhausting non-renewable mine resources at prices that do not warrant continued production. The value of our assets, specifically the ore retained in the ground, will be enhanced accordingly," he added. Hayes spoke comprehensively about the mining world's need to become more proactive in introducing "discipline to the market". Being affected by the price of zinc more than any other part of the supply chain, Hayes stressed the need for miners to take more responsibility over prices as their "very survival hinges on it". "We need to quit blaming smelters, China, funds and demand and start taking control of our own destiny. As miners we have simply introduced more zinc units into the market than are required," Hayes said. While admitting that making the decision to close a mine is not an enviable one, he stressed it was something that needed to be done in the face of reduced demand. Hayes also made the point that potential new mines should be delayed until the current climate has improved. The call for greater consolidation within the industry was also made by Hayes. He cited zinc's fractured nature as another possible root of its lack of industry returns. Due to its current dysfunctional state "consolidation of the zinc industry would be much cheaper than at other points in the price cycle", Hayes said. "Given Xstrata's probable takeover of MIM, rumoured Volcan- Votorantim discussions, and competitive reaction these might generate, we may already be on the verge of greater industry consolidation." Zinc usage is anticipated to increase in 2003, the International Lead & Zinc Study Group (ILZSG) has said following its spring forecast meeting. The group also predicts that zinc supply will outstrip demand again this year, although to a smaller extent than in 2002. "Regarding the Western world market balance, the group anticipates that the supply of refined zinc metal will again exceed demand in 2003. However, mainly as a consequence of recent supply-side reductions, the size of the predicted surplus has been significantly reduced from 411,000 tonnes to just over 100,000 tonnes," ILZSG said. Growth of 5.7% in use in Asia is seen as the primary factor in the anticipated 3.9% growth in global refined zinc usage. The USA is expected to see growth of 2.6% over 2002 while European growth will climb by 2%, according to the group's outlook. ILZSG forecasts a 3.9% rise in global zinc mine output, but also predicts a 2.9% drop in refined zinc metal output in Europe, due mainly to the closures of MIM Holdings' Avonmouth operations and Metaleurop's Noyelles Godault plant. However, global output is set to increase by 1.9% after anticipated growth in Australia, India, Iran, Kazakhstan, Korea and Namibia. Chinese net exports of refined metal to the West are expected to be smaller than those seen last year "as a result of both a decrease in shipments from China and a continued increase in the level of imports", ILZSG said. However, China is expected to continue importing large amounts of zinc contained in concentrates. Concs imports from the West are expected to reach 250,000 tonnes for a second consecutive year, according to the group. Metal Bulletin newsroom, London Tel +44 207 827 9977