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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (33077)	2/22/2009 9:04:04 PM
From: LoneClone	Respond to of 193020

PREVIEW-Zinc output cuts may help miners in TC talks Sun Feb 22, 2009 8:38pm GMT uk.reuters.com By Carole Vaporean RANCHO MIRAGE, Calif., Feb 22 (Reuters) - Draconian production cuts brought on by sharp declines in zinc demand may drag out talks between miners and smelters negotiating refining fees beyond this week's annual American Zinc Association's (AZA) event. Zinc industry participants from around the world will gather at this year's AZA conference from Feb. 22-25 at the Rancho Mirage resort in southern California. Treating and refining charges, or TCs, are traditionally hammered out at the annual gathering, but some are pessimistic about the prospects of any quick agreements this week. Industry sources said sizeable mine shutdowns since the fourth quarter should surely drag TCs below last year's deals. Smelters have also cut output, leaving it to deal-makers to hash out how much of an upper hand miners may have. Those discussions "are something that has been more protracted than usual, largely because the market has been trying to get a proper feel for how much production has been cut on either side," said Gayle Berry, metals analyst at Barclays Capital in London. As for outright cuts, Berry said she figured miners have slashed slightly more than a million tonnes of output, with smelters trimming just under a million tonnes. "It's a large portion of output that's been cut. In terms of market size, it's just under 10 percent of global production that you're looking at," said Berry. Others believe miners have cut even more. Accounting for China's production, a significant portion of the global total, continues to be a bit of a guessing game with many small independent mines dotting parts of its countryside. Smelter cuts have been less clear, but still significant. Mo Ahmadzadeh, president of Mitsui Bussan Commodities (USA) Inc, said his tally shows on an annualized basis 1.6 million tonnes of closed mine production, with China accounting for about 450,000 of that total. His figures show smelters shut about 1.155 million tonnes on an annualized basis, including China's smelter cuts. SURPLUS EYED Despite the vast reductions, most analysts still look for a zinc surplus this year of around 200,000 to 300,000 tonnes, because demand for zinc has deteriorated. Used primarily to galvanize steel for the automotive and construction sectors, whose markets have all but collapsed, zinc has few bright spots on the horizon in the near or medium term. Since miners were faster and bolder in their curtailments, TC talks may start moving in their favor. In its year-end earnings report, Inmet Mining (IMN.TO) in Canada said it expects to see 2009 zinc treatment charges of about $200 per dry tonne, well below last year's deals, thought to have settled around $300 to $325 per tonne based on a $2,000 to $2,500 a tonne London Metal Exchange zinc price. Zinc on the London Metal Exchange MZN3 closed at around $1,090 per tonne on Friday, a steep drop from a record high of $4,600 a tonne set in December 2006. This year, Inmet said it expects to engage in price participation with smelters for zinc concentrates as it anticipates a balanced or deficit concentrate market. It said it looks for participation of 10 U.S. cents per dry tonne for zinc prices greater than $1,200 a tonne and 7 cents a tonne for prices below $1,200 a tonne, nearly unchanged from last year's so-called price escalators and de-escalators. Some analysts said they think Inmet's call may be low and priming the turf for a bidding match. But with the economic stimulus packages in China and the U.S. as the best hope for a pick-up in demand and questions looming about how quickly they will come into effect, smelters will certainly have to lower fees this time around.