Australian zinc miner CBH Resources Ltd (CBH.AX) said on Tuesday it was cutting more than a third of its work force at its main mine to save costs as it combats declining prices for the metal.
It was shedding 220 jobs, or 37 percent of the workforce, at its Endeavour lode in eastern Australia, where it has spent more than A$90 million ($85 million) on improvements recently.
Zinc prices have tumbled 20 percent to around $1,885 a tonne since January on the London Metal Exchange MZN3 as demand for the metal used in steel galvanizing falls and inventories balloon.
The global zinc market showed a 78,000 tonne surplus in the first four months of 2008, according to figures released on Monday by the International Lead and Zinc Study Group.
The job losses were regrettable but necessary to establish a foundation for the company's future during the existing difficult lead and zinc market, CBH Managing Director Stephen Dennis said in a statement.
The move will save the company around A$100 million $94 million) a year, according to the statement and was unrelated to a proposed merger with Perilya Ltd (PEM.AX), Dennis said.
Perilya and CBH earlier this year agreed to merge to create a single lead and zinc mining house better able to compete in world markets and capitalised at around A$500 million.
Production at Endeavour is expected to increase in the next 12 months to 1.3 million tonnes from 1.05 million this year, according to the company.
CBH shares were up 12 percent to A$0.28, while Perilya was 7.7 percent higher at A$0.84 in late trading. ($1=A$1.06) (Reporting by James Regan)
© Thomson Reuters 2008. All rights reserved.