Summary Zinifex is a major integrated lead and zinc producer, with mining and smelting operations in Australia, Europe and the USA. Ores are extracted from the opencut mine at Century (Qld) and the underground Rosebery operation (Tas). Zinc and lead concentrates are shipped for processing with third party concentrates at the group's smelters at Port Pirie (SA), Hobart (Tas), Budel (Netherlands) and Clarksville (the USA). The latter three plants are zinc refineries whereas Port Pirie is a lead smelter.
Unique Differentiating Factor Zinifex is a specialist, major integrated lead and zinc producer. It has not diversified away from its area of expertise into other commodities. The company has an interesting history (see below) and though only listed in April 2004, has two key smelting assets that first commenced production a century ago. As a policy, it does not take out hedging cover and is therefore fully exposed to the swings in metal prices and currencies.
Major Customers & Competitors Zinifex sells its metals and alloy products to a broad range of customers in the Australian, Asian, European and American markets. Whilst metals are priced on the London Metals Exchange, Zinifex receives a varying premium above LME for its products from its long-term customers for quality and reliability of supply. It functions in a competitive market and is subject to the cyclicity of metal prices with the interaction of economic growth on supply and demand.
History In 1988, Pasminco listed as the then world's largest integrated zinc and lead producer. It was formed from the base metal mining and processing assets of CRA and North Limited (both now part of Rio Tinto). Pasminco went into administration in September 2001 at a time of weak metal prices, high debt and a hedge book position that was a major liability. The listing of Zinifex in April 2004 enabled a portion of the outstanding liabilities of Pasminco to be settled with its creditors.
ZFX Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
