Strike affects zinc output at Asarco’s Tennessee mines

A 4-week-old strike at three Tennessee zinc mines owned by Asarco (AR-N) has cut production to 30% of capacity.

The employees, represented by the International Chemical Workers Union, went on strike Oct. 14 after failing to ratify a new 3-year contract. The old contract expired Oct. 10.

The strike shut down both the Coy and Immel mines, in the eastern portion of the state, while production at the Young mine, the largest of the three, has been maintained by salaried personnel.

The workers rejected a second proposal, which contained a wage increase of US75 cents per hour. No further discussions have taken place.

In a Reuters report, Asarco President Richard Osborne downplayed the impact of the strike, saying the mines do not constitute a large part of the company’s operations.

Asarco produced a total of 39.5 million lbs. zinc during the third quarter at a price of US73 cents per lb. (For the year to date, the company has yielded 118 million lbs. at US45 cents per lb.) Lead and copper output during the quarter amounted to 60 million lbs. and 246.8 million lbs., respectively.

Osborne said the company plans to expand its core business, copper, by boosting output at the Cuajone mine in Peru and refurbishing the Ilo smelter, in the same country. Those facilities are held by Southern Peru Copper (PCU-N), in which Asarco holds a 54% interest.

Meanwhile, at the Silver Bell mine in Arizona, Asarco has installed solvent extraction-electrowinning facilities. And at the Minto copper-gold mine in the Yukon, startup is scheduled for early 1999.

The company recently was awarded the right to acquire a 60% interest in El Loa, a concession in northern Chile. The remainder is held by state-owned Corporacion Nacional Del Cobre de Chile (Codelco).

Osborne remains bullish on the red metal’s market potential, and pointed out that “China has a remarkably robust economy, and there are no indications that this level of activity is likely to diminish in the foreseeable future.” For the third quarter, Asarco netted earnings of US$45.8 million (or $1.10 per share), compared with US$6 million (14 cents per share) in the similar period last year. Revenues rose to US$661.3 million from US$647.8 million.

For the first nine months of the year, Asarco earned US$138.3 million ($3.26 per share), up from earnings of US$114 million ($2.67 per share) in the comparable period last year. Revenue in both periods was in the range of US$2.1 billion.