zinc rises as 500000 tonnes of production hal

This is equal to the total estimated production of 'small' chinese zinc mines that tipped the market into surplus

SURPLUS FOR 2008 PREDICTED TO BE 215kT BY ILZSG

Zinc rises as 500,000 tonnes of production halted in China
Posted: May 13, 2008, 8:42 AM by Jonathan Ratner
Mining

Zinc prices rose roughly 5% on the London Metal Exchange after reports out of China suggested a large portion of global production was shut-in. A massive earthquake in China on Monday that killed thousands forced zinc smelters to halt production, closing as much as 500,000 tonnes of capacity, or roughly 11% of the country’s total, according to reports from Antaike, a state-owned research group.

The impacted production is equivalent to approximately 4% of annual global refined zinc production, TD Newcrest base metals analyst Greg Barnes told clients. China produces around 27% of the world’s zinc from mines and 34.5% of its refined zinc.

“It is challenging to determine whether how long this production could be impacted, but there are also reports that the region is an important supplier of natural gas and the earthquake is impacting power supplies, which would also have a negative impact on refined zinc production – zinc refining is an electricity intensive process,” the analyst said.

At the same time, the rebuilding process could boost the need for zinc in China, which currently stands at 32.% of global refined zinc demand, Mr. Barnes added.

Breakwater Resources Ltd. and HudBay Minerals Inc. are the stocks under coverage at TD that are most highly-levered to zinc, while Lundin Mining Corp. and Teck Cominco Ltd. are less levered.