Trevor Arran, Investor Relations, Kumba Resources
Send this article to a friend
Print this page

» Kumba runs rule over Waterberg mine
» Kumba BEE says debt can be borne
» Anglo anointed blindsides Kumba execs

If you want to share this article, simply sign into one of these sites and select your network. It’s that easy Click here to find out more about how to use this button

Kumba to double Mongolian zinc
Allan Seccombe
Posted: Thu, 02 Feb 2006

[miningmx.com] -- KUMBA Resources and its Chinese partners in the Chifeng zinc smelter are joining forces with three other Chinese companies to more than double output at the plant to 110,000 tons/year by 2008, Kumba.

Kumba’s current partners are Chifeng Hongye Zinc Smelting Company and Chifeng Baiyinnuoer Lead Zinc Mine Company. Together with Kumba, they produce 50,000 tons/year of zinc, which is used in galvanising and brass.

The partners will vend their 50,000 ton smelter into the new project and China Nonferrous Metal Industry (NFC) will stand guarantee for the loan to expand capacity.

Kumba’s share in the expanded operation will be 23%.

“This is certainly a business we are very confident in,” said Kumba investor relations manager, Trevor Arran. “The Chinese engine for zinc is really running.”

China is a net importer of the metal. All Chifeng’s production will be sold in China, Arran said.
This is certainly a business we are very confident in
The price of zinc on the London Metal Exchange (LME) has hit record highs of $2,378 a tonne because of a shortage of refined metal and shortages in the concentrate market.

Last year the price was $1,382 a tonne, up from $1,048 in 2004. India, a traditional importer of zinc, could become an exporter this year as new plants come on stream, generating a surplus of the metal, Sushil Bhatter, chief executive officer of Binani Industries Limited, which owns Binani Zinc, India's second-largest producer of the metal, told Reuters.

London-based Natexis Commodity Markets said in a report it expects the zinc price to average $1,550/tonne this year and $1,450 in 2007.

Stocks are continuing to fall and the metal is being supported by fund interest and concerns about supply because of structural tightness and a number of disruptions.

“The combination of concentrate shortages and recent smelter closures will curb refined output growth in 2006/07.
Free news alerts: click here to subscribe
“Although zinc is one of the markets where we are positive on fundamentals, we do not expect that this will necessarily translate to higher prices from current levels,” Natexis said.

“Demand in the price-sensitive brass and die castings markets will be affected by current price levels, raising the potential for a sharp correction,” it said.

According to the International Zinc Association, Chinese demand makes up a quarter of the world’s consumption, and its galvanising industry absorbs about the third of that compared to 50% in other parts of the world.

As Chinese construction forges ahead, demand for galvanised steel, which is corrosion resistant, is expected to remain strong.

NFC has another African link. It owns the Chambishi copper and cobalt mine in Zambia.

The other two groups involved at the Chifeng smelter are Chifeng City Power Engineering General Company and Xinbaerhuyouqi Xinxin Mine Company.