Vancouver-based Teck Cominco expects that the zinc market surpluses for both 2008 and 2009 will likely be smaller than currently being forecast, partly because lower prices may force mines to close prematurely, president and CEO Don Lindsay said on Thursday.

Zinc prices have fallen sharply over the last 12 months, and Teck and its partner Xstrata announced earlier this month that they would close their Pillar mine, in Australia, prematurely because of slumping metal prices, which were compounded by a strong Australian currency.

“We think that there are a number of operations out there that are vulnerable, but in some cases they are one-mine companies, so its their main operation and it sometimes takes a little bit longer for people to bite the bullet and close down,” Lindsay said on a conference call to discuss the Vancouver-based miner's second quarter performance.

“Ultimately, if the zinc price stays in its current range we think there will be other shutdowns,” he commented.

Aim Resources, which owns the Perkoa zinc project, in Burkina Faso, said a couple of weeks ago that it would put the project of care and maintenance because low prices for the base metal were making it difficult to raise project finance.

Lindsay pointed out that mine closures, if they continue, would have an affect on global supply fundamentals, which could mean that the market surpluses being forecast for this year and next may be overstated.

At the end of 2007, the surplus for 2008 was seen at as much as 400 000 t to 500 000 t, “and it now looks like its going to be about half of that, or perhaps less”.

“It wouldn't surprise me if the 2009 numbers turn out to be materially less than are currently forecast, just because there will be a number of shutdowns between now and then.

“We just can't predict which ones and when.”

Teck Cominco's zinc unit, which posted an operating profit of C$256-million in the second quarter of 2007, only managed C$99-million in the same period this year, a drop of 60%, thanks to lower prices.

Production was relatively flat, at 171 000 t of zinc in concentrate, compared with 176 000 t a year earlier.

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