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About 60% of zinc, lead mines in China's Sichuan shut on inspections: Antaike

Supply of mined zinc and mined lead in southwestern China's Sichuan province is expected to be lower in August and September, as operations at about 60% of zinc and lead mines in the province have been suspended since August 7, state-owned nonferrous metals information division Antaike said in its August zinc sector report.

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The halt was mainly due to the month-long presence of inspectors from China's central environment protection unit since early August, the agency said.

Some miners in Sichuan have also taken this opportunity to halt mining activities and carry out annual overhauls which would last for about a month, Antaike added.

Since August 7, the fourth batch of environmental inspectors have stationed themselves in eight provinces, namely Sichuan, Tibet, Qinghai, Xinjiang, Jilin, Zhejiang, Shandong and Hainan, which altogether accounted for 11.4% of China's mined zinc output of 4.63 million mt last year, a report from State Development & Investment Corp showed.



Separately, operations at zinc miners and smelters in Sichuan were not affected by the 7.0-magnitude earthquake that struck Jiuzhaigou county in the province on August 8, as they are located far away from the epicenter of the quake.

Sichuan is one of China's key zinc and lead mining base, and is among the top five Chinese provinces with vast zinc reserves, with each of them having provincial zinc reserves of over 2 million mt, according to data from the National Statistics Bureau.

But the province's mined zinc production in the past years had been affected by environmental protection control measures. Zinc output from Sichuan in 2016 reached 240,000 mt, down from 326,000 mt in 2014, but higher by 27% from 2015, data from Antaike showed.

Officials from Sichuan-based key zinc miners Sichuan Huili Zinc and Hongda Group could not be reached for comment.

Sichuan, together with Qinghai province and the autonomous regions of Inner Mongolia and Tibet were the top four regions that contributed to the increase in China's mined lead output in 2016, Antaike data showed.

The four regions accounted for more than half of China's mined lead output of 2.227 million mt last year, according to NBS data.

Elsewhere in Inner Mongolia, operations at some lead and zinc mines there have been disrupted for one week, as the autonomous region's celebration of its 70th establishment anniversary had caused a halt in the delivery of explosives to the mines, a report on zinc battery maker Hebei Jinhong Chemicals Co.'s website said.

But it said mining activities at Urad Back Banner Zijin Mining was unaffected as the miner has enough explosives. Urad Back Banner Zijin has three lead, zinc mines in Inner Mongolia with aggregate ore processing capacity of 3.8 million mt/year, according to information from Zijin Mining.


LIMITED NET RISE IN CHINA'S MINED ZINC CAPACITY SEEN FOR 2017


Antaike is now expecting actual commissioning of new mined zinc capacity this year to be lower than previously forecast, with very limited net increase in domestic mined zinc capacity in 2017, because of a net decrease in domestic mined zinc capacity in 2015-16, as well as environmental protection inspections in Sichuan and Hunan provinces that have shuttered mines there.

Earlier this year, Antaike forecast China to add new zinc concentrate output capacity of 244,000 mt/year in 2017, mainly in Sichuan, Gansu provinces, and Inner Mongolia.

Antaike added that the tightness in domestic mined zinc supply this year is more severe than it predicted. Despite higher zinc prices this year, Chinese zinc smelters have cut output due to tight concentrate supply, with the shortage expected to last into the next one to two years.

Production costs at Chinese smelters are also expected to rise from a combination of tight concentrate supply and the nonferrous metals sector needing to get an emissions license before the end of 2017, which would push Shanghai Futures Exchange zinc futures prices up to Yuan 26,000/mt levels in August, Antaike said.

But the potential rise would be limited, as this could impact demand from the downstream processing sector, the agency added.

The most actively traded October zinc futures contract on SHFE closed at Yuan 24,745/mt ($3,711/mt) on Wednesday, up Yuan 485/mt from Tuesday.

--Joshua Leung, newsdesk@spglobal.com
--Edited by Irene Tang, irene.tang@spglobal.com