article:nyrstar director envisages acquisition

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http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaxz3IHZrT1g

Nyrstar May Buy Project, Looking in Australia, Europe (Update4)
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By Andrew Clapham and John Martens

April 28 (Bloomberg) -- Nyrstar NV, the worlds largest zinc producer, may buy a mining project in two or three months and is looking at sites in South America, Australia and Europe, Chief Executive Officer Roland Junck said.

The company has potential acquisitions in the pipeline beyond its current bid for CBH Resources Ltd., an Australian lead and zinc miner, Junck said today in Brussels.

Nyrstar, which cut production 23 percent last year, resumed full output at its Balen smelter in March as world economies revived. The company, owner of six smelters on three continents, is also ramping up output at idled mines it bought last year that are able to feed about 21 percent of its raw-material needs. The average price of zinc for three-month delivery in London rose 91 percent in the first quarter from a year earlier.

Nyrstars first-quarter output of zinc, used to protect steel from corrosion, rose 48 percent to 265,000 metric tons after restarting its largest smelter, it said today.

Output is ahead of our first-half forecast of 510,000 tons and with further volumes to come from the Balen smelter, Liberum Capital Ltd. wrote in a note to investors.

A 2010 agreement on treatment charges, the fees that mining companies pay to have their semi-processed ore turned into finished metal, will give smelters a 36 percent share of zinc revenues, down from about 42 percent in 2009.

Treatment Charges

Nyrstar said it agreed a 23 percent jump in the charges to about $250 a ton, based on a zinc price of $2,000 a ton. Smelters are paid an extra 5 cents for every dollar the market moves above that price and 9 cents for every dollar above $2,500 a ton. For every dollar drop, smelters receive 6 cents less.

The outlook for zinc demand, driven by the world economic recovery and Chinese growth, is positive, Junck said in a presentation at the companys annual general meeting.

World crude steel capacity utilisation increased to approximately 80 percent in February 2010, the highest level since September 2008, he said. Consumption of galvanised steel sheet, a key driver of zinc demand, continues to show signs of strengthening.

Galvanised steel consumption in the first-quarter rose 67 percent from a year earlier in China and 42 percent in Europe, according to the presentation.

Nyrstar fell 13 cents, or 1.3 percent, to 10.07 euros at the close of Brussels trading. Stock market indexes declined around the world today after Standard & Poors downgraded its credit ratings for Greece and Portugal.

Nyrstars lead output fell 18 percent to 41,000 tons in the quarter. The company wont raise its takeover offer for CBH to counter Toho Zinc Co.s A$0.24-a-share bid, Junck said. Nyrstar offered A$0.195 for each CBH share on April 12.