Zinc Investing News

By Leia Michele Toovey- Exclusive to Zinc Investing News

Shanghai zinc opened at its upside limit of 4 per cent on Thursday, chasing the stock rally in the US and London. The rally was inspired by a US rate cut causing a short term bubble in the commodity prices. Later, prices came back to reflect recent trends. LME Zinc touched a low of $1,215 a tonne, down 3.6 per cent, lead fell to $1,500, down 5.1 per cent. Zinc for three-month delivery on the London Metal Exchange sank to $1,100 per tonne but was at $1,105 per tonne by 0843 GMT versus Thursday’s close of $1,160 a tonne.

Company news

The world’ second largest zinc producer, Teck Cominco Ltd, has declared force majeure on sales from its Alaskan based Red Dog Zinc mine due to bad weather. Sales will be cut for six months, following the fact that the poor weather forced the company to ship the last vessel without a full load. The Red Dog zinc and lead mine is the world’s largest producer of zinc concentrate; the concentrate is stockpiled at the port and shipped to customers between July and October each year due to its Arctic location. Final tonnages shipped from the mine for 2008 were about 920,000 tonnes of zinc concentrates, and 247,000 tonnes of lead concentrates.  

On Tuesday, Breakwater Resources announced the shutdown of its Myra Falls Zinc Mine. The announcement came shortly after rumours began circulating about the shutdown. The mine closure is due to the global economic climate; poor commodity prices plus rising production costs eroding into the company’s bottom line. This action enables the company to retain valuable zinc assets that we will mine in the future when the zinc market returns to levels that more accurately reflect underlying supply and demand fundamentals. The company said temporary layoffs and workforce reductions at both operations will proceed over the next days and weeks, with some mining and milling continuing in the interim. “The company will continue to closely monitor economic and market conditions and will take appropriate actions in the best interest of the company, its employees and its shareholders,” the release stated.

Australian miner Kagara Ltd, on Thursday cut its 2008/09 zinc production target by 12.5 per cent, citing “difficult times” caused by the dramatic drop in the metal’s price. The revised output plans are designed to help reduce overall capital expenditure by A$70 million and will delay indefinitely final construction of the company’s Mungana zinc ore treatment plant in Queensland.  Completion of the plant was scheduled for mid-calendar 2009, allowing for an increase in mining of nearby deposits. At the same time, Kagara will move to increase copper production over the 2008/09 financial year to around 35,000 tonnes, by exploiting its highest margin deposits, the spokesman said. Kagara, which produced 4,411 tonnes of contained zinc and and 9,472 tonnes of contained copper in the quarter ended Sept. 30, was also scaling back zinc exploration work on its Admiral Bay lode in Western Australia, the spokesman said.

Russia’s largest zinc producer, Chelyabinsk Zinc will slash its investment program after posting a first-half net loss on collapsing metal prices. Chelyabinsk Zinc recorded a net loss of $34.17 million in the first six months of 2008, compared revenues declined 29 per cent to 5.7 billion roubles from 8.0 billion roubles, as a sharp decline in zinc prices outweighed a 5.5 per cent increase in output of zinc and zinc alloys over the same period. Chelyabinsk Zinc Chairman Sergei Moiseyev said the company would make a “dramatic reduction” in its investment program and cut its 2009 zinc output forecast to 150,000 tonnes from the 170,000 tonnes previously forecast for this year.