SHANGHAI, Mar. 28 (SMM)--According to Luoping Zinc and Electricity Company’s annual report, its zinc ingot output
during 2010 was 84,169 mt, 84.17% of the company’s annual target. The company failed to meet its goals due to raw material and energy shortages caused in part by drought conditions.
Luoping Zinc and Electricity Company was affected by the drought in southwest China, but has been suffering from raw material shortages for much longer. Since Luoping Zinc and Electricity Company, China’s only domestic enterprise involved in mining, electricity power generation, and smelting, has been affected by energy shortages, such problem will be even more serious at other enterprises.
Since southwest China relies heavily on hydro-electric power, supply can vary significantly during high and low-water periods, which also affects production at enterprises. According to the company’s annual report, the company had reached full capacity, cut costs of zinc products, during July, August, September and October while their operating rates were only 50% due to power shortages during low-water period. Zinc smelting capacity in southwest China accounts for 25% of total domestic capacity.
Raw material shortages are especially troublesome for larger enterprises and directly affect raw material costs and profits. Although Luoping Zinc and Electricity Company has its own mines, it failed to meet lead and zinc concentrate output targets during 2010 due to the low grade of its ores. In addition, production at many domestic mining enterprises was affected by fluctuating zinc prices. As import TC has steadily fallen in recent years, domestic smelters were all trying to secure local raw materials at home, increasing competition for scarce lead and zinc resources.
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