Reuters reported that Shenzhen Zhongjin Lingnan Nonfemet, China's third largest zinc producer reopened refining facilities at its Shaoguan smelter in Guangdong province on July 19th 2011 after a nearly 10 month closure linked to water pollution.

The company said that the firm will keep the smelting facilities at Shaoguan shut and is upgrading most of those facilities. Upgraded smelting facilities would be reopened after the completion of an ongoing upgrading project and local authority’s approval of the work.

Mr Li You analyst at Minmetals Futures in Shenzhen city in Guangdong said that while the reopening of Shaoguan's refining capacity could still increase production of refined lead and zinc in China the world's top producer of the two metals, it is not expected to weigh heavily on prices in China for now.

He said that Shaoguan won't be able to run full rates for the time being. In June, China produced 458,000 tonnes of refined zinc and 446,000 tonnes of refined lead up 11.7% and 20.9% from a year ago respectively. Zinc is used in the production of galvanized steel used for the building sector. In the H1 of 2011, zinc production rose 6.1% on the year to 2.574 million tonnes and lead surged 25% to 2.302 million tonnes.

Mr Li said that many market players were expecting China's consumption of zinc to rise in the second half of the year from the H1 and those predictions had been cushioning Shanghai zinc prices which are up over 8% from a month ago at CNY 18,670 per tonne in midday trade. But lead smelters in China may cut production in the H2 as environmental checks rise, and that could offset extra output from Shaoguan.

The Shaoguan smelter has been shut since October 21st 2010 to comply with a provincial government pollution investigation. The refining capacity was shut at the same time. Before the closure, the Shaoguan smelting and refining capacity was listed at 350,000 tonnes a year of lead and zinc, two thirds of which is for zinc.

(Sourced from Reuters)