ECONOMY

Bulgarian smelter forced to close as losses mount

SOFIA (Reuters) – Bulgaria’s second biggest lead and zinc smelter OTZK has temporarily halted zinc production due to erratic concentrate imports caused by low world supply, Executive Director Nikola Pashinov said yesterday. He said that output suspension would give OTZK time to modernize its zinc production equipment and pile up enough zinc concentrates to resume production around April 20. «We are sandwiched between a world zinc concentrate deficit and weak base metal prices on global markets. This is going to be a very tough year,» Pashinov told Reuters in an interview by telephone from the southern town Kardzhali where OTZK is based. «A lot of mines have been closed worldwide. We used to import zinc concentrates from Romania, Serbia, Turkey and Greece but we are now forced to import from very distant places like Morocco, Mexico and Peru,» Pashinov said. Depressed world metal prices hurt OTZK’s financial results last year, forcing it to cut output and its work force to survive. By contrast, rival KTZM, Bulgaria’s biggest lead and zinc smelter, has said it will raise zinc output this year by 15 percent to 73,000 tons and had registered a net profit for 2002, despite low world prices. OTZK halted primary lead production since April of last year and reduced zinc output by 35 percent in 2002 from a year earlier to offset the impact of low prices. Pashinov said the smelter had resumed some primary lead output since late February and now used slightly below 50 percent of its lead output capacity. OTZK processed mainly lead acid batteries last year, which accounted for less than one-third of its annual lead output. The plant produced only 6,844 tons of lead last year, well below the 31,600 tons in 2000, while zinc production stood at 19,530 tons compared to 30,000 tons in 2001, showed OTZK’s data provided to Reuters. «We still manage to survive, generating losses. But we have to keep on producing despite little hope for recovery in global markets this year,» Pashinov said. «We hope this year’s production of both lead and zinc will be higher than last year,» he added. In addition to output reduction, OTZK laid off 200 members of its staff last year, which now totals 800. OTZK’s loss jumped to 4.673 million levs ($2.54 million) in Jan.-Sept. last year from a 1.6-million loss for the whole of 2001. The results for the whole of 2002 are not yet available.