SYDNEY (Dow Jones)--The Thai government has granted a key mining...

SYDNEY (Dow Jones)--The Thai government has granted a key mining permit to zinc and lead producer Padaeng Industry PCL (PDI.TH), allowing the company to restart its mining operation.

Padaeng had to suspend operations at its Tak mine in October because of delays in the permit's renewal.

"The minister of industry granted the license to Padaeng at the start of this month, and they can continue mining activity as before," said Wisanu Tabtieng, chief of the mining enterprise promotion group that is part of Thailand's Department of Primary Industries and Mines, or DPIM.

The DPIM is responsible for processing mining approvals that are then signed off by the Minister of Industry, Suwit Khunkitti, who has held the post since February, following elections in December.

As a result of the mine shutdown, high-grade concentrate production during the fourth quarter dropped 70% to 14,000 dry tons, bringing output for the year to 149,000 dry tons, a 20% on-year decline.

Padaeng company officials were unavailable for comment.

"There was a delay because the mining area of Padaeng was in a watershed, so there were environmental concerns," said Wisanu.

The granting of the license will be keenly watched by miners such as gold producer Kingsgate Consolidated Ltd. (KCN.AU), which has battled delays to key leases for its Chatree North expansion project without which gold output will cease soon.

Late last year, the government suspended a number of licenses in response to concerns from communities and activists that the environmental impact of gold mining could outweigh the economic benefits, but later said Kingsgate's applications were still being processed.

Padaeng made up for the shortfall of concentrate for its smelter by buying feed on the market. Its smelter has an annual capacity of 110,000 tons of zinc metal.

Zinc prices have been under pressure in the past months because a number of new mine projects are coming on stream, easing previously tight market fundamentals.

At 0531 GMT, zinc on the London Metal Exchange traded at $2,249/ton, up $10 on the previous afternoon kerb.