Mitsui Mining Plans to Increase Zinc Output at Smelter in Japan

TOKYO, Mar. 9 -- Mitsui Mining & Smelting Co., Japan's biggest refined zinc producer, plans to increase output at its Hachinohe smelter by 11 percent in the year starting April 1, a company executive said.

The company will raise output at the smelter to 100,000 metric tons in the next fiscal year from 90,000 tons in the current year, Nobuyuki Nakamoto, general manager of the zinc business, said yesterday in an interview. The plant has capacity of 112,000 tons, he said.

Prices for zinc, used to galvanize steel, almost doubled in the past year as the global economy recovered from its worst postwar recession, spurring production. Nakamoto said the output increase at Hachinohe was due to a pick-up in exports.

"Demand is strong following an increase in production by the steel sector for cars and brisk overseas sales, especially in Southeast Asia," especially Thailand, Indonesia and Vietnam, Nakamoto said. Shares of Tokyo-based Mitsui Mining declined 0.8 percent to 253 yen at 1:19 p.m. local time.

The Hachinohe plant in Aomori prefecture, northern Japan, produces prime western-grade zinc, which has a minimum purity of 98.5 percent and is used mainly for the construction sector. Special high-grade metal with minimum purity of 99.995 percent is used for steel products in vehicles.

The recovery in demand for western-grade is "still relatively slow because of weak capital spending" compared with that for the special high-grade metal, he said. The main export markets for special high-grade include China and Taiwan.

Full Capacity

The company's smelters at Kamioka in Gifu prefecture and Hikoshima in Yamaguchi prefecture, both west of Tokyo, produce special high-grade. Kamioka, with annual capacity of 67,000 tons, and Hikoshima, with 74,000 tons, produce special high-grade zinc. Both are operating at full capacity.

The company, which is to announce its April to September output plans early next month, planned to produce 229,000 tons of zinc in the current fiscal year.

The Hachinohe smelter reduced its output by as much as 20,000 tons in the current fiscal year after the global credit crunch slashed demand, Nakamoto said.

Japan posted a current-account surplus in January as exports climbed for a second month, an indication overseas demand is sustaining a recovery.

Mitsui Mining projects Japan's zinc exports to decline to 110,000 tons in calendar 2010, down from a record 156,000 tons in 2009, while the country's domestic consumption may rise to 526,800 tons from 433,000 tons.

Domestic consumption in 2009 was at the lowest level since 1966, when the country used 399,700 tons, according to data from the Japan Mining Industry Association.

Japan's zinc production may total 560,000 tons in 2010, up from 540,000 tons in 2009, while lower than output of 615,500 tons in 2008, Nakamoto said.