By Kishori Krishnan Exclusive To Tin Investing News

China has been bailing out its struggling domestic smelters by stockpiling metals since December. Heralding the Chinese New Year, wherein most companies and projects run overtime during the Spring Festival in order to ensure annual production plan, several firms have decided to take the long road.

Hainan Haiyu Tin Plate Industrial Co Ltd plans to churn out the first piece of tin sheet by June from its new 0.2 million tonnes per year tin plate line, whose construction is close to the end. Then, Hainan will grow to be the second tin plate production base after Shanghai in China. The relevant official of the tin plate producer said, “We didn’t stop production lines in the festival holiday for the sake of completing the new project and putting it into production on time.”

In addition, Hai Mining United Co Ltd uncovered its new target to double its yearly output of finished iron ore to 6 million tonnes in three years and double its annual revenue to CNY 4 billion. The company started normal production since the third day of Chinese Lunar New Year to strive for the targets and stable financial growth.

Last week, the China stock market finished higher from the previous week’s holiday for the Chinese New Year, adding more than 3 per cent in the process. However, Chinese shares fell Thursday, snapping a three-day rally that had been spurred by reports suggesting a nascent economic recovery, with banks and textiles dropping while steel stocks rose on lower ore prices. Nonferrous metals producers fell after rising earlier in the week.

Jiangxi Copper Ltd., China’s second largest metal producer, was off 2 per cent to 13.84 yuan. Yunnan Tin Ltd. slumped 4.1 per cent to 13.33 yuan. Steel makers bucked the downward trend however, according to an AP report, on news that ore prices fell, which would boost their profits. Baoshan Iron & Steel Ltd., China’s biggest steel maker, added 1.1 per cent to 5.66 yuan, while Liuzhou Iron & Steel Co. gained 3.6 per cent to 4.01 yuan.

Crisis ridden

The global financial crisis and sharp falls in metals prices have forced several companies to abandon or put on hold their plans to bring new mines on stream. Some existing producers also have shut down or curtailed output at mines and plants as high costs and low prices bite.

Anglo American Plc (AAL.L) said it has temporarily halted production at Loma nickel  mine in Venezuela, partly due to high transport costs.

Albidon (ALDq.L) said nickel output for the December 2008 quarter had fallen and lowered its production forecasts.

Saudia Arabian Mining Co Maaden said it would delay by three years the start of production at a planned aluminum smelter after Rio Tinto Alcan abandoned the project.

BHP Billiton Ltd (BLT.L) may be about to close the Ravensthorpe nickel mine in Australia and probably has already trimmed output of most other commodities, with the exception of oil and iron ore.

Good tidings

Amidst all the gloom, there is some good news. Cadillac Ventures Inc. (CNSX:CDC) has announced $2.3 million financing. The firm, which is a development focused exploration company which, in addition to the Matsa Huelva joint venture, has two Canadian exploration projects, located in regions that have been historically active, has entered into an agreement with Trafigura Beheer B V, an existing shareholder of the company, for a non-brokered private placement financing pursuant to which it will issue units for the gross proceeds of $2.3 million. The proceeds from the financing will be used for exploration expenditures and general working capital purposes.

The prime assets of Gippsland Limited (ASX/AIM GIP) are the world-scale 44.5 million tonne Abu Dabbab and the 98 million tonne Nuweibi tantalum deposits located in Egypt. The company is scheduled to produce 650,000 pounds of tantalum pentoxide, plus 1,530 tonnes of LME grade tin metal per year. The Abu Dabbab project alone is expected to have a mine life of 20 years, however, given that Gippsland’s total JORC Code Resources exceed 140 million tonnes, the company will look to increase tantalum and tin production substantially following commencement of operations.

A scoping study in relation to an extensive alluvial tin deposit contained within the 20km exploitation licences covering the 44.5 million tonne Abu Dabbab tantalum-tin-feldspar project was completed during December. The Company has estimated an inferred resource of 438,000m of alluvium containing in excess of 760 tonnes of recoverable tin metal within the alluvial tin deposits explored. The directors of the firm are confident that additional resources of alluvial tin will be delineated within the exploitation licences, as the previous exploration work utilised the same high tin cut-off grade, effectively excluding large quantities of the overlying tin-bearing alluvium. These areas are currently being evaluated as part of the company’s continuing tin exploration programme within the region.

Based upon the present tin price of US$11,500 per tonne, the scoping study indicated that the alluvial tin has the potential to generate additional US$8.7 million revenue during the one year it will take to process the material.

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