Lundin Mining output increase now 'on track'

Lundin Mining, the Swedish company that took over operation of the Galmoy mine in Co Kilkenny last year, said yesterday that it was on track to increase production at the mine by 10 per cent by the end of the year - a year later than originally expected.

Chief executive Karl-Axel Waplan also said he was confident the company could continue growing its profit on the back of strong demand and higher metals prices

Toronto and Stockholm-listed Lundin acquired Galmoy - Europe's largest producer of zinc - in March last year through the purchase of Arcon International Resources.

Since then it has focused on improving efficiencies at the Irish mine, as well as searching for more resources in a bid to extend its current five-year life span.

Speaking after an investor presentation in Dublin yesterday, Mr Waplan said he believed the company could extend the life of the mine "substantially".

Lundin, which also has two producing mines in Sweden - Zinkgruvan and Storliden - is benefiting from recent spikes in metals prices. Zinc in particular has seen a renaissance over the past year as a dearth of investment led to supply shortages. It is currently trading at about $3,300 (€2,616) a tonne.

Zinc, which is extracted as a concentrate and sold to smelters for transmission into a useable product, is most commonly used in construction and transport as a galvanising agent to prolong the life of steel objects.

"Zinc has a very strong future," said Mr Waplan. "Prices are going to remain at these levels for some time as there is no new supply coming on stream for a while."

While need for zinc in Europe and the US will remain steady, demand from China and India will increase significantly helping keep prices high, he said.

Lundin spends about 37 US cents extracting a pound of zinc concentrate from its Zinkgruvan mine in Sweden, compared with 60 cents at Galmoy.

This is something that Mr Waplan and his team are currently seeking to address. He said salaries were also significantly higher in Ireland and as a result have pushed up the cost of running the mine.

Lundin, which employs about 250 people in Ireland, is also developing another site in the Republic, at Keel near Navan. Mr Waplan said that while the project was at "very early stage", establishing its potential will be a priority for the group.

In total, the group plans to spend as much as $10 million on exploration this year, up from $7.1 million in 2005.