Falconbridge grounds Kidd for eight weeks (March 03, 2003)

Citing a poor zinc market, Falconbridge (FL-T) is extending to eight weeks the planned closure of its refining operations at the Kidd metallurgical site in Timmins, Ont.

Daniel Picard, general manager of the Kidd division, says the decision is based on three factors: low revenue from treatment charges and metal premiums, high operating costs, and low metal prices.

The operation’s 300 employees will have to wait until April to learn of the dates of the shutdown, which was originally slated for May.

The closure is partly intended to allow for maintenance work, and partly to avoid high operating costs resulting from seasonal plant restraints, vacation scheduling, and energy costs.

The extended closure is also aimed at offsetting a supply shortfall for 2003, allowing the refinery to build up inventory and operate well into next year.

The Kidd plant normally supplements the Kidd mine’s zinc concentrate supply with concentrate from Quebec and sometimes South America.

Falconbridge warns that if current market conditions continue, it will consider a similar shutdown next summer.

During 2002, the Kidd Creek operation suffered an operating loss of $78 million, or $14 million more than a year earlier, despite increased mine production and record volumes of refined copper and zinc. Kidd Creek’s cash costs averaged US62 per lb. during the year.

Overall, Falco earned $73 million (or 34 per share) during 2002, up from 16 million (2 per share) in 2001. Revenue between the two periods climbed to $2.4 billion from $2.1 billion on stronger nickel and copper prices.