CANCUN, Mexico — U.S. Zinc Corp. is on track to expand zinc oxide production at its two Tennessee operations, executive vice president Tracy Baugh told AMM on the sidelines of the International Zinc Association conference in Cancun.

"We started the engineering work last year and are in the process of ordering and acquiring equipment for completion later this year or in early 2014," Baugh said. "As long as automotive stays strong, we anticipate slightly better demand this year, specifically in the tire market."

The Houston-based subsidiary of São Paulo-based Votorantim Metais Ltda. will add one muffle furnace each to its Clarksville and Millington facilities, which will increase its annual zinc oxide production by 14,000 tonnes by the end of the year, Baugh said.

The 14,000 tonnes is a conservative estimate, he added, noting that U.S. Zinc could still reach its initial target of 17,000 tonnes per year set last summer (amm.com, July 17).

In addition to automotive demand, the recent recovery in the construction sector is a positive sign for zinc markets in 2013, Baugh said, although he maintained that domestic economic growth will be stifled until politicians in Washington resolve the country’s debt issues.

"Year-over-year growth in automotive and construction improving will help demand this year," he said. "It’s much better than it was a year ago, but there’s still lots of room for improvement."

In the meantime, the political stalemate will continue to cause uncertainty, leading business owners to put a halt on investing, he added.

Baugh said the trend for special-high-grade (SHG) zinc premiums seems to be pointing to a steady increase, pegging the spot zinc premium at 8 cents per pound. "Raw materials for SHG are more expensive. There’s also increased iron and ore costs, fuel, transportation logistics," he said.

AMM’s SHG zinc spot premium is in a range of 7.5 to 8.5 cents per pound.