Earthquake hits lead and zinc production

The domestic lead and zinc market may be affected by the earthquake in Ludian county in Yunnan province because of the disruption to transport and suspension of some mining operations, analysts said on Tuesday.

"It is difficult to give an exact estimate at the moment, because zinc miners and smelters are out of reach for now, but it has raised some concerns regarding the market because lead and zinc deliveries have been hindered by the earthquake," said Bian Binbin, an expert specializing in lead and zinc.

The earthquake will not have too much of an impact on the lead and zinc smelting capacity in the area, Bian said.

Bian, an analyst at SCI International, a commodity market information service organization, said that the major impact to the market is that a suspension in deliveries may cause a temporary shortage of lead and zinc products in major lead- and zinc-consuming provinces in southern parts of China, including Jiangsu, Zhejiang and Guangdong.

"This, in turn, is pushing the zinc prices higher for a little while," Bian said.

Although the full extent of the damage is still unclear, some lead and zinc miners have already halted production, according to a report by National Business Daily.

A source from a local lead and zinc smelter said the disaster has caused damage to the company and some mines have already been forced to shut down.

Yunnan province is a major production base for copper, lead and zinc, and the city of Zhaotong has an explored reserve of lead and zinc of about 1.6 million metric tons.

And its reserve for coal hits 16.6 billion metric tons.

But frequent earthquakes in China's southwest have caused damage to the mining and smelting businesses in the area before.

A wholly owned subsidiary of Yunnan Chihong Zinc & Germanium Co Ltd in Zhaotong suffered a loss of more than 45 million yuan ($7.29 million) due to an earthquake in 2012.

The company said in a statement that its zinc production has not been affected by the recent earthquake.

Haolong Group, near to the epicenter, also reported zero damage and said its zinc production has continued.

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