Chinese zinc production at a stand stillChihong sees China 2008 zinc output growth slowing
Thu Mar 6, 2008 3:14am EST
SHANGHAI, March 6 (Reuters) - Yunnan Chihong Zinc and Germanium (600497.SS: Quote, Profile, Research) expects growth in China's zinc output to slow this year due to rising energy and resource cost rises and the impact of monetary policy tightening.
Chihong, whose lead and zinc production accounted for about 4 percent of China's output last year, said on Thursday that it aimed to produce 174,700 tonnes of zinc and zinc alloy in 2008, up 0.7 percent from last year's 173,466 tonnes.
The country's zinc production capacity will not increase as much as expected and costs of labour, energy and resources had been rising, the company said in a summary of its annual report.
"With prices of resources and energy rising, tightening monetary policy and other macroeconomic control measures will have a far-reaching impact on the industry chain of zinc," it said.
Chihong said it aimed to produce 274,700 tonnes of lead and zinc, up 3 percent from 2007. Its 2007 lead and zinc output grew 24 percent from the previous year.
Chihong expected to expand amid a wave of consolidation in the nonferrous metals industry, spurred by tightening government controls and lower profit margins.
The company also plans to produce 100,000 tonnes of lead in 2008, up 7 percent from 93,083 tonnes in 2007.
Whether the gap between global lead supply and demand disappears would depend on output and exports from China, the world's largest lead producer, the company said.
The company also expects to churn out 13,500 kilograms of germanium this year, up 4 percent from 2007, as the metal is increasingly used in infrared optical devices and solar cells.
The company reported a 35 percent jump in net profit in 2007 from 2006 despite falling prices of its products, rising raw materials costs and cuts to export tax rebates. (Reporting by Rujun Shen; Editing by Ken Wills)