MINING: It's not every day that exploration companies stumble across a gold mine, and even when they do, it isn't always the automatic ticket to fortune that it sounds. Laura Slattery reports

Finding a zinc mine capable of making profits is even rarer; last year prices for metals slumped to their lowest levels since the 1930s, leaving existing mines struggling to remain operational and money for new exploration at a minimum.

In the Pallas Green area of Co Limerick, where geological data suggest the presence of a substantial ore body, Irish mining company Minco is preparing to restart its exploration. So far, 50 holes have been drilled. Last year, five holes intersected high-grade mineralised rock, but larger deposits of zinc remain elusive.

"We have found the fingers; now this year we're looking for the palm of the hand, the core," says Mr John Teeling, chairman of Minco.

"We think it's the best prospect in Ireland since the Lisheen mine was discovered in 1990, but the industry is always high-risk."

As zinc is its main product, the Irish mining industry is suffering the effects of a worldwide surplus of the base metal, which protects steel against corrosion and is mostly used in the automobile and construction industries.

Last October, Europe's largest zinc mine at Tara in Co Meath was mothballed - shut down temporarily due to the fall in zinc prices, making 700 workers temporarily redundant.

A maintenance programme to improve the condition of the mine is currently taking place and will be completed by June, but no decision to restart production has yet been made by its Finnish owner, Outokumpu, which has said it wants to exit base metals mining.

With large established mines suffering the effects of the slowdown, the incentives to keep on drilling in the hope of hitting upon veins of untapped minerals are rapidly drying up.

For example, Minco's joint venture partner in the Pallas Green project, the Canadian company Noranda, has cut its international exploration budget for 2002, and pulled out of two other partnerships with Minco at Shinrone and Holy Cross.

"When you see the metal prices the way they are, people forget about exploration," says Mr David Hough, president and CEO of Ivernia West, which operates the zinc mine at Lisheen, Co Tipperary.

Ivernia cut its exploration expenditure in 2001, pending an improvement in metal prices, and says it is unlikely to receive cash from the Lisheen mine in the near-term.

Lisheen and Galmoy mines, owned by Irish mining group Arcon, are both situated in a mineral belt in the midlands known as the Rathdowney Trend.

Both have suffered the effects of a slowdown that has seen zinc selling for under $800 a tonne, when it needs to be over $1,000 a tonne for the mines to remain viable. "Really, we would all like the price of zinc to be around $1,150 a tonne, so these are pretty hard times," says Mr Christian Schaffalitzky, managing director of Irish resource company Ennex. The company's zinc mine in Kazakhstan has also been hurt, and Ennex is looking to sell it and focus instead on oil and gas projects. "We are doing our best to complete a deal at the moment," Mr Schaffalitzky says.

For companies committed to zinc mining in the long-term, it is a question of waiting - waiting for the ore in older mines to be used up and waiting for an increase in demand.

"We would be hopeful that the expansion of the American economy would mean that mining enterprises would pick up," says Mr Hough at Ivernia, while Mr Teeling is also confident there will be an upturn in prices - "it is just a question of when", he says.

But even when they do, Ireland is still a high-cost country to operate in, he adds. Drilling holes in the ground is a costly exercise with no hope of generating revenue in the short-term. "We're nearly afraid to find something at Pallas Green," says Mr Teeling.

"It might take 300 or 400 holes to prove it's there and then 10 years before it is allowed to come onstream."

As well as heavy structural costs, there are frequent planning permission delays, often due to objections from environmental groups trying to protect green-field sites.

The image of the mining industry suffered following the discovery of lead pollution, including dust blows from a dried-out tailings pond, at Silvermines, Co Tipperary, where Mogul Ireland operated a zinc mine until 1982.

The geological environment in Ireland might be very attractive for mining companies, but blasting holes to reach base or precious metals hundreds of metres underground doesn't exactly help keep the environment over ground any more beautiful.

"The industry is not run by marketing people, it's run by engineers, and it does represent the destruction of natural resources. You cannot mine without disrupting the ground," Mr Teeling says.

"There is a real question in Ireland now as to whether Ireland wants mining or whether it is more disruptive than it's worth," he adds.

"Mining is a great industry, but it's not very 21st century."