Reuters reported that 7 months after a fatal explosion at its zinc refining facility in Monaca, Pennsylvania, Horsehead Holding Corporation has production back up and running at pre incident levels and 2011 demand outlook ready to meet that ramped up capacity.
Mr Jim Hensler president and CEO of Horsehead said that "We are essentially running at pretty much the same level we were before we had the incident in July."
He said that the late July explosion forced the company to cut back its six-furnace smelter operation to five furnaces and shut all of the refinery's ten columns used to produce zinc oxide and refined zinc metal. As a result, production rates fell sharply in the Q4 of last year, prompting the company to declare force majeure on some zinc oxide and special high grade zinc contracts. Since the start of the year, Horsehead's stock price is up 17% settling Friday at USD 15.27 per share. The company's smelter is the largest in the United States, capable of producing around 150,000 short tonnes of zinc.
Mr Hensler said that we think demand looks like it's going to be able to support the 6 furnace operation, eyeing Q1 ramp up in the zinc oxide business where Horsehead is a major supplier. Zinc oxide demand is going to be a little higher this year than it was last year. Overall, we are going to be about where we were at our peak monthly shipment level in 2010 before the incident but I think it's going to take us a few months to ramp up to that level.
At its peak, Horsehead's shipping rate of zinc oxide ran close to 65,000 short tonnes to 70,000 short tonnes per year. The ramped up refining facility at Monaca now has the capacity to feed 100% electronic arc furnace dust to the smelter but lacked the needed demand from the steel industry to fill that capacity.
In the Q4 of last year, we were actually close to 80 percent of our feed was from EAF dust as we see steel capacity utilization get back to levels it was pre 2008, then we probably would be in the situation where we could be 100 percent fed by electronic arc furnace dust. That's our least cost feed that's the plan.
Another plan in the works is the construction of a new and environmentally friendly production plant either at its Monaca facility or at another site, capable of producing 150,000 short tonnes of zinc per year.
Mr Hensler said that we have narrowed it down to a few sites. At the end of the day the decision is going to rest on the cost of electric power there, the cost of labor whether we can get the environmental permits we need and the degree to which we can get incentives from the state.
He said that we are also doing a more detailed engineering study than we did in the feasibility study which won't be completed for a number of more months. It will give us a sharper number on what we think the total capital investment will be so that we can then make the final decision about moving forward.
(Sourced from Reuters)
