Metals To Market
Pasminco’s products are sold into 45 countries spanning the core markets of Europe, United States, Australia and Asia. During the year low metal prices on the London Metals Exchange (LME) and depressed market conditions in key Asian markets presented significant challenges for Pasminco. The average realised price for zinc during the year was US$994, down 17% from the previous year’s US$1,192; and for lead it was US$518, down 7.8% from the previous year’s US$562.
The downturn of metals demand in Pasminco’s Asian markets required an expansion of the market base to service a wider spread of geographical markets. This included work to secure new zinc customers for Australian metal in Europe and the USA through Pasminco’s Budel Zinc and Clarksville operations respectively, ensuring a fully sold sales book across the Pasminco group.
In spite of securing market share growth in a depressed Asian economy, the premiums were under downward pressure during the year. In contrast, premiums achieved in Europe and the USA remained firm.
Pasminco consolidated its improved distribution system in Asia with warehouses established in four strategic locations enabling efficient door to door delivery services to our core customers who will now have a shorter lead time and a guarantee of metal availability. Dedicated and cost effective shipping arrangements had been secured to replenish the various warehouses in regular intervals for efficient supply chain management.
The Group improved its share of the dry cell battery sector in Indonesia, and gained significant improvements in the galvanised sheet sectors in Malaysia and Taiwan.

Pasminco is now starting to see some signs of recovery in the Asian economies, particularly in South Korea, Taiwan (which has continued to be strong through the Asian crisis), and Indonesia which is improving off a low base. In particular, zinc sales to the core Asian markets of Indonesia, Malaysia, Hong Kong/China and Taiwan is estimated to increase by 15% this year with these markets expected to contribute 62% of total Pasminco’s Australian zinc sales, compared to 51% last year.

Pasminco will continue to work closely with its customers to expand its sales of value added alloys in both lead and zinc. These include specialised zinc alloys for diecasting and galvanising, and the ‘VRLA REFINED Lead’ and ‘MF REFINED Lead’ products for the growing high-tech battery sector supplying the automotive, UPS and telecommunication industries.
‘In the field’ technical consultancy and services, fully supported by research and laboratory facilities in Australia, are being provided to Pasminco’s valued customers to assist them to improve their manufacturing processes and to enhance the utilisation of Pasminco’s products.
Pasminco also works closely with various industrial associations including International Zinc Association, International Lead Zinc Research Organisation, Advanced Lead Acid Battery Consortium, and Galvanisers Associations in customers’ countries for the promotion and market development of the industry as well as final end-use. With its expanded silver production capacity to 430 tpa, Pasminco will continue to maintain and build on its core silver markets and end users in the photographic and industrial segments and jewellery.

Concentrates Marketing
Mines negotiated modest improvements in frame contract treatment charges for the 1999 calendar year for both zinc and lead concentrates. There is, however, anticipation that a market surplus will emerge from the latter part of calendar 1999, especially for zinc concentrates, as new mines such as Century add to global concentrate supply.

Pasminco retains frame contracts with Asian customers covering the major portion of concentrate production not required by the Group’s smelters. The largest contracts are with Japanese and Korean smelters and all customers have continued to perform reliably against their contracts. A small proportion of output is reserved for spot sales or to cover fluctuations in production or requirements at Group operations. During the year a number of spot sales were executed, capitalising on tight market conditions that developed and enabling working capital levels to be minimised.

Total zinc concentrate sales for 1998/99 increased by 14% compared to the previous year, with sales to Group smelters rising by 9% and external sales increasing by 22%. Lead concentrate sales increased by 2% and 98% of sales were made to Group smelters.

To optimise feed mix, Pasminco purchases some concentrates from other Australian and overseas mines. The largest suppliers to Pasminco’s Australian smelters are the Hellyer mine in Tasmania, the McArthur River mine in the Northern Territory and the Cannington mine in Queensland. The Hellyer mine is due to close by mid 2000 and arrangements are well advanced to replace this material with concentrate from other Group mines, including Century, together with concentrate from some external suppliers.

Considerable work has been done on the marketing of Century concentrate and frame contracts have been secured with a range of smelters in Asia and Europe. Together with sales to Pasminco’s own smelters, these contracts cover approximately 90% of annual zinc concentrate production capacity.

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