Falling Profits Depress Production at China Lead and Zinc Mines, SMM Summit Reports

SHANGHAI, May 21 (SMM) – Production at Chinese lead and zinc mines has been falling due mainly to squeezed profits, SMM Lead&Zinc Summit reports.  

Falling prices of lead and zinc, and strong TCs of ores are blamed for the drop in profits, said Wang Ye, deputy general manager of BGRIMM Lilan Consulting Corp., at the 2015 SMM Lead&Zinc Summit.  

Costs at domestic lead and zinc mines were up 8% year-on-year in 2014, and profits lost 10.1% during the same period, Wang cited industry data as saying at the summit on May 13-15. 

“Profits at zinc mines average around 1,000 yuan per tonne in 2014, and conditions are worse in small and medium mines,”Wang explained to participants at the summit.  

Many mines said production at those idled mines will not be resumed until zinc prices rise above 17,500 yuan per tonne.   

In addition to lower profits, stringent environmental protection inspections and weakening demand are another reasons behind the decline in their output, Wang added.   

In 2015, output of lead ore is expected to grow 2.65% year-on-year to 2.76 million tonnes in China, and that of zinc ore is expected to increase 5.4% year-on-year to 4.78 million tonnes, Wang predicts. 

China produced 417,000 tonnes of lead concentrate in Q1 2015, down 16.3% year-on-year, and 941,000 tonnes of zinc concentrate during the same period, off 8.1% year-on-year, according to China Nonferrous Metals Industry Association. 

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