Damaged pipeline halts MMG zinc shipment from Oz mine

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(China Daily/Agencies)
Updated: 2009-11-19 08:07

China Minmetals Corp, the nation's largest metals trader, has exhausted stockpiles and halted shipments of concentrate from its Century zinc mine in northern Australia pending repairs to a damaged pipeline.

"We've now completed shipping of all the zinc concentrate stocks that were stored," Sally Cox, a spokeswoman for Minmetals' Melbourne-based MMG unit, said yesterday. The mine in Queensland state is the world's second-largest open-pit zinc operation.

Customers including Nyrstar NV, the world's largest smelter of zinc, will source alternative supplies while the company seeks to complete repairs to the pipeline that ruptured on Oct 5, Cox said.

Zinc, used to galvanize steel, has surged 88 percent this year in London as a 4 trillion yuan government spending program stoked demand in China.

"The impact on prices will be limited as the world is not short of zinc given stockpiles have risen so much this year," Liu Biyuan, an analyst at GF Futures Co, said. "As well, higher prices encourage a resumption of output that was stopped because of the economic slowdown."

Credit Suisse Group AG last week raised its average zinc price forecast for 2010 by 36 percent to $2,100 a ton.

Stockpiles of zinc tallied by the London Metal Exchange have jumped 71 percent since the beginning of the year as a global recession curbed demand. Inventories in Shanghai warehouses last week were at their highest since the exchange started trading zinc futures in April 2007.

A bypass will likely be connected to the main Century mine pipeline by the end of this week and will be tested with water before restarting concentrate production, Cox said. She wouldn't say whether the company had declared force majeure, a legal clause that allows a company to miss deliveries because of circumstances beyond its control.

"We've been in ongoing contact with the customers," she said. "We are confident they will want to take up the stock again once we are able to supply it."

Century produced 158,603 tons of zinc concentrate in the September quarter, MMG said on Oct 26.

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