August 28, 2008

Yunnan Luoping Zinc cuts two thirds capacity on power shortages

It is reported that Yunnan Luoping Zinc & Electricity Co a Chinese producer of the metal has cut two thirds of its capacity because of a lack of power.

Yunnan Luoping Zinc & Electricity Co said in a statement to the Shenzhen Stock Exchange April 24th 2008 that production has dropped to 50 tonnes of zinc a day. Rivals Yunnan Chihong Zinc & Germanium Co. and Yunnan Aluminum Co. said they shut some plants for planned maintenance because of expected power shortages.

Luoping said the company ran 60% of its capacity in the first quarter after snowstorms disrupted power and one third of capacity since mid April. A seasonal drought led to serious shortages with power supply cut to almost one third of normal.

Goldman Sachs Group Inc said on April 17th 2008, an electricity shortage that shows no sign of abating is limiting metals production and boosting commodity prices. Copper, aluminum and zinc output were reduced this year in China and South Africa because of a lack of power.

Mr Cai Jinrong an analyst at Wanxiang Resources Co said “It will be serious if the power cut spreads to bigger producers in the province. Producers can ramp up production after the power is restored, but the market trades on short-term changes in supply and demand.''

According to Beijing Antaike Information Development Co Luoping is among the top 15 Chinese zinc producers.