China's Hsikwangshan antimony output may fall 46 pct
(Reuters)
Updated: 2010-04-14 13:43
Counter:98

Production of antimony ores at Hsikwangshan Twinkling Star Antimony Co, China's top producer of the metal, could fall 46 percent this year due to tighter safety rules in Hunan province, a senior executive said on Tuesday.

Lower ore production is likely to cut the company's metal production and that could reduce exports from China, the world's top antimony producing nation.

Such a constriction could further drive up prices, which have already risen 14 percent in two weeks because of reduced Chinese supplies of the metal, used for fireproof paint, upholstery fabric and PVC window frames.

The local government in China's Hunan province has cracked down on wildcat mining of antimony after a fatal accident at a mine of Hsikwangshan, a subsidiary of Hunan Nonferrous Metals Corp, in October last year, the executive said.

"There have been more than 10 people arrested after the accident," he said, adding that the mine, one of Hsikwangshan's two antimony mines in Hunan, had resumed production this year.

The executive, who declined to be named because of the sensitive nature of the topic, said increased environmental and safety requirements were causing the company's two mines to lower production and forcing other smaller mines to halt production, reducing supply of antimony ores in the province.

"We are producing 500-600 tonnes of metal a month only," the executive said of the two mines' combined output and compared to about 1,400 tonnes per month before the accident.

"We don't have sufficient metal to sell. We want to produce more but it is hard to source ores," the executive said.

He added that droughts in Yunnan and Guizhou provinces had also reduced supply of antimony ores to the company.

Hsikwangshan may produce about 7,000 tonnes of metal in ores this year versus about 13,000 tonnes last year, the executive predicted.

The smelter produced about 20,000 tonnes of antimony metal in total last year using its own ores and ores purchased from other mines. Metal output this year would depend on how much ore it could buy from the domestic market, he said.

"This is no longer a commercial issue, but a political one. Once a fatal accident happens, the mine will be closed down and the head of the mine removed. In some cases, they would be penalized or jailed," a minor metals trader for a Western firm in China said.

"Local officials are not willing to risk their necks for the profits of local miners," he added, referring to the tougher measures in Hunan.

Antimony of grade 99.65 stood at about $7,400/$7,900 a tonne on Monday, its highest level since Reuters began recording antimony price data in late 1993.

Hsikwangshan was offering spot antimony trioxide containing more than 99.5 percent of metal at $7,700-$7.800 a tonne, free-on-board basis, the executive said.