Diversified South African based resources group Exxaro Resources Limited announced that the Exxaro Board of Directors has confirmed that the production of zinc at the Zincor refinery in Springs, Gauteng, will cease effective December 31 2011.

This follows the group announcement in July 2011 that it was planning to cease zinc production and was contemplating retrenchments in the base metals division. A 60-day consultation period with labour unions, in accordance with labour legislation and under the auspices of the CCMA, has now been completed, and the ramp-down of the operation to a mothballed state has started.

Mr Sipho Nkosi CEO of Exxaro said “We are taking all feasible steps to provide the most suitable options to affected employees, customers and suppliers. For employees this includes fair retrenchment packages, training courses to acquire new skills, and affected Zincor employees being preferentially considered for vacancies in the group.”

Plans are in place to meet supply agreements. Up to 796 employees are affected by the decision. The move is part of Exxaro strategic plan to divest from its zinc assets. The decision to cease production has been made in the context of the difficult conditions of the zinc market, including its cyclical nature, low margins as well as the significant impact of higher electricity prices and the exchange rate.

Exxaro current portfolio of zinc assets includes the Zincor refinery, a 50.04% interest in the Rosh Pinah zinc and leads mine, a 26% interest in Black Mountain Ltd which owns the Black Mountain zinc and lead mine and the Gamsberg zinc project, as well as an effective 22% interest in the Chifeng zinc smelter in China.

The sale of Exxaro shareholding in Rosh Pinah and Chifeng is ongoing and Exxaro is in discussions with interested parties. Stakeholders will be kept updated.