FACTBOX-Base metal production cuts by end-Q1 2009

Steps taken since the start of the year have come on top of a swathe of cuts announced in late 2008 in response to plummeting demand from the car and construction sectors.

Faced with the bleakest prospects, producers of aluminium and nickel have continued to announce sizeable cuts through to the end of the first quarter.

But they are now starting to be offset partly by reversals and start-ups of new capacity in the case of aluminium and, in nickel, by new projects coming on line.

As of the end of March, analysts estimate nearly one-fifth of global nickel mine output cuts had been announced and almost 6.5 million tonnes or 16 percent of global aluminium production.

For other metals, measures to combat over-supply tended to dwindle towards the end of the period and never really took off in the first place.

Copper producers in particular have felt less of a need to respond to falling prices as many are still profitable and output has already been hit hard by technical problems and lower ore grades at some major operations.

Lead mine cuts have also been less forthcoming, and made mainly as a result of curbs at zinc mines where lead is a by-product.

Despite the massive curbs announced in nickel, other projects are starting up.

Last week, Brazil's Vale (VALE5.SA) said its Goro nickel project in New Caledonia was due to start up in the second quarter and the Onca Puma project in Brazil is set to begin output in the third quarter. [ID:nN23256368]

In aluminium, curbs by top producing nation China had been fully implemented by January, with annualised output figures reaching 11.1 million tonnes per year, said Massimo Rossi, senior analyst at CRU Group. This compared with total output of 13.105 million tonnes in 2008.

But the downtrend in place so far this year is starting to be reversed at least in part.

"At the moment the State Reserves Bureau (SRB) and local governments stockpiling programmes have prompted restarts of capacity", Rossi said.

He estimated that around 800,000 tonnes per year (tpy) of aluminium capacity, divided between curtailed capacity and new expansions in China, had started by the end of February.

Stephen Briggs, a commodities strategist at RBS Global Banking & Markets, estimated copper mine cuts announced so far at about 725,000 tonnes per year (tpy), or a bit less than 5 percent of global output, if Zambia's Mufulira and Nkana mines close.

If they don't the loss would be just over 500,000 tpy he estimated. CRU Group analyst Graham Deller said around two-thirds of the 1.2 million tonnes per year of western zinc mine cutbacks announced were known by the end of last year.

The remaining one-third have been announced in the first quarter, but the pace of announcements in zinc has slowed recently.

Annualised cutbacks to date*

Metal Volume World output

('000 mt) (pct)

Aluminium 6,300 16.0

Copper** 550 3.5

Lead*** 200 5.0

Nickel 270 18.5

Zinc*** 1,200 15.5

*All refer to mine output with exception of aluminium.

**Excludes Mopani mines.

***Western world only.

Sources: CRU Group, RBS.

(Compiled by Karen Norton; edited by Anthony Barker)

March 31 (Reuters) - The long list of output curbs by mining and metal producers has continued to grow rapidly in the first quarter of 2009.