Zinc Firm Abandons Mine Plans

Chelyabinsk Zinc Plant, the country's largest zinc producer, has abandoned plans to develop a mine near its main production asset and will slash investments after plummeting metal prices led to a first-half loss.

Chairman Sergei Moiseyev said Chelyabinsk Zinc would make a "dramatic reduction" to its investment program after the firm on Friday reported a net loss of 907 million rubles ($34.2 million) compared with a year-ago profit of 1.2 billion rubles.

"Chelyabinsk Zinc has been through different storms. This is the big one, but I am confident that we have the resources and experience to face it," Moiseyev said in a statement.

Zinc prices have fallen more than 60 percent since March to trade around $1,140 per ton. The metal is worth only one-quarter of its all-time peak of $4,580 per ton in November 2006.

First-half revenues declined 29 percent to 5.7 billion rubles as a 37 percent drop in zinc prices outweighed a 5.5 percent increase in output, Chelyabinsk said.

Moiseyev said the company had reduced its 2009 production forecast to 150,000 tons. Chelyabinsk did not give its earlier forecast for 2009, but has predicted 2008 output of 170,000 tons.