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Sumitomo to Increase Zinc Production by 4% at Bolivian Mine
Jul 13,2010 16:38CST
industry news

TOKYO, July 13 -- Sumitomo Corp., Japan's third- biggest trading company, plans to boost zinc production at its mine in Bolivia by 4 percent this year as the operation runs at full capacity, an executive said.

The company will raise output to 256,000 metric tons on a refined metal basis in 2010 from 246,000 tons in 2009 at its San Cristobal mine, Takahiro Izuta, the project's general manager, said in an interview yesterday. Sumitomo owns 100 percent.

Zinc has gained 27 percent in the past year as China, the fastest-growing major economy, and emerging markets drive demand for metals used in homes and cars. Trading companies in Japan are increasing overseas investment to secure supplies. China is the biggest consumer of the metal used to galvanize steel.

Sumitomo took full ownership of the mine, the world's third-biggest producer of silver and sixth-largest of zinc, in March 2009 after its partner, Apex Silver Mines Ltd., filed for bankruptcy. Investment in the mine totaled $1.4 billion, up from the initial estimate of $600 million, according to the Tokyo- based company.

Profitability has improved as a result of cost-cutting and because the mine is fully operated by Sumitomo, Izuta said. The company plans to raise lead output to 76,000 tons in 2010 from 70,000 tons in 2009, while silver production will fall to 12.1 million ounces from 16.1 million ounces, he said.

Ore Shipments

Zinc for three-month delivery on the London Metal Exchange dropped 1.7 percent to $1,824 a metric ton at 11:23 a.m. in Singapore. Three-month delivery lead was little changed at $1,780 a ton, while silver for immediate delivery fell 0.3 percent to $17.9075 an ounce.

Ore shipments to the Chilean port of Mejillones from the mine resumed 10 days after protesters demanding royalty changes and infrastructure improvements blocked railway access to the mine on April 12, according to the company.

"Although there have been shipment delays of 15 days to one month following the protests, production was not disrupted and we've been increasing shipments to catch up," Izuta said.

The San Cristobal mine in Bolivia's central Potosi region processes 40,000 tons a day of ore that contains zinc, lead and silver, according to the company. The mine ships ore to Europe, South Korea and Japan, and supplies about 30 percent of Japan's total zinc ore needs, Izuta said.



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