zinc supply growing slowly

http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-04-23T085957Z_01_ALL332317_RTRIDST_0_OZABS-MINERALS-AUSTRALIA-ZINIFEX-20060423.XML

Australia's Zinifex sees zinc supply growing slowly
Sun Apr 23, 2006 10:59 AM GMT168
Printer Friendly

MELBOURNE (Reuters) - World number-two zinc producer, Australia's Zinifex Ltd., said there would be delays in bringing on new supplies to meet strong market demand, despite record prices.

The current prices reflected an acute shortage of raw material caused by a lack of exploration when the market was weak, Zinifex Chief Executive Greig Gailey said on Sunday.

It was difficult to start new projects quickly, he said. Many zinc mines were small and a lot of potential projects faced technical challenges or high costs.

"There certainly will be a response to price, but we believe it will be somewhat slow in coming," he told Australian Broadcasting Corp. television, three days after his firm's shares hit a record high.

London Metal Exchange zinc futures rallied to fresh record highs above $3,300 a tonne on Friday amid strong demand for base metals.

Zinifex was investigating a zinc deposit at Dugald River in the Australian state of Queensland, which could be a very substantial mine, but it would not be producing before 2010 or 2011, Gailey said.

The company was interested in expanding production in any of the metals it produced, which also include lead, copper, silver and gold, he said. Buying assets was also a possible route to expansion, but price was seen as an issue.

Zinifex shares fell 7.2 percent to A$10.84 on Friday, after closing at a record high the previous day. So far this year, the stock has gained 58 percent.