BRUSSELS, July 29 -- Belgium's Nyrstar (NYR.BR: Quote), the world's biggest producer of zinc, reported forecast-beating underlying core profit boosted by higher zinc smelting production and first-time profits from its mining activities.
Over the past year, the group has expanded mining, which offers higher margins than its traditional smelting operations, buying mines or stakes in them in the United States, Peru and Greenland.
Nyrstar said on Thursday zinc production from its own mines was expected to reach 25 percent of zinc metal production by 2012.
Underlying EBITDA (earnings before interest, tax, depreciation and amortisation) tripled year-on-year to 93 million euros ($121 million). A Reuters poll of 7 banks and brokerages found an average forecast of 89.4 million euros.
With its Balen smelter back to full capacity, Nyrstar said first-half zinc market metal production rose 22 percent year-on-year to 530,000 tonnes.
A severe downturn in the construction and automotive markets at the end of 2008 and in 2009 led to lower demand for zinc and prices as low as some $1,100 per tonne, forcing Nyrstar to halt production at the Balen smelter and cut it at other plants.
Zinc is used to galvanise steel to protect against corrosion.
"Whilst in the short term markets are expected to remain volatile, the fundamental medium to long term outlook for zinc and other resources is strong, Chief Executive Roland Junck said in a statement."
Zinc futures MZN3 ended 2009 at around $2,580 per tonne, and are currently trading at around $1,955.
A stronger US dollar also helped the group report higher profits. Nyrstar's earnings are largely denominated in dollars, whereas a substantial part of operating costs are denominated in euros.
Nyrstar said it was on track to cut annual costs by 75 million euros by the end of 2010, compared with 2008 levels. ($1=.7684 euro)