The frosty start to 2008 might nip at the profits of Hunan Nonferrous Metals Corporation this year.

General Manager Li Li said yesterday that the first-quarter snowstorms affected the company's output, as some operations were suspended.

"The suspension does have an impact on us," Li said at the company's 2007 annual results announcement.

As a result, the company intends to boost production and ask the central government for a tax break to reduce losses, Li said.

A producer of refined nonferrous metals such as zinc and lead, Hunan Nonferrous was hit hard last year as zinc prices plummeted 50 percent to 17,000 yuan per ton in the last quarter of 2007.

The sharp dive in zinc prices, coupled with the reduction of export tax refunds, contributed to a 30 percent decline in the company's net profits last year - from 451 million yuan in 2006 to 315 million yuan.

Hunan Nonferrous shares dipped 5 percent yesterday, closing at HK$3.06.

Despite adverse operation conditions, the firm's management remains optimistic that it will see stable growth this year.

Hunan Nonferrous Financial Controller Chen Zhixin said the price of zinc has regained some ground, and Chen expects it to stabilize at around 20,000 yuan per ton this year.

The company, which seeks domestic and overseas acquisitions to bolster its metal reserves, revealed that it is reaching out to countries such as Japan, Canada and Australia.

Other than the company's earlier metal-exploration project with Australia Compass Resources, Chen said the company has purchased a 10 percent stake in Abra Mining Limited - a listed mining company in Australia.

"We hold 15 million shares in the company, and there is still room to increase our stake," Chen said.

On the mainland front, Hunan Nonferrous has completed its acquisition of a 98.33 percent stake in Hengyang Yuanjing Tungsten for 354 million yuan.

The company said that the purchase will boost its reserve in scheelite by 300,000 tons. Scheelite is an important ore of tungsten - a material used to make light bulbs.

(HK Edition 04/29/2008 page2)