Pasminco earlier this year acquired the smelter in Clarksville, Tennessee when it bought fellow Australian miner Savage Resources Ltd.

Pasminco immediately scotched Savage's plans to expand the smelter, acknowledging the world was already awash with too much zinc. Savage had plans to triple production at the smelter to 300,000 tonnes a year to capture more of the U.S. market from imports.

"With regard to the expansion of Clarksville we said not now ... we didn't say not never but we are not looking at that expansion any time soon," Pasminco managing director David Stewart told Reuters. "We may review that in the futurebut it's not on the list at the moment," he said.

Stewart said that there was no trigger price which would put the expansion back on track. "One of the issues in the industry, which is why there hasn't been much investment in the last decade, is that the economics of investing in new capacity are not particularly favourable," Stewart said. The fundamentals for zinc appeared quite positive, according to NM Rothschild & Sons.

"The market has been in a small deficit with inventories edging lower from an already low starting point," Rothschild said in a report. Pasminco, also a major lead producer, said that metal's prospects were brightening. "I am reasonably optimistic about the position of lead," Stewart said.