Production at the Tara zinc mine in Co Meath is on target for 2003, but the poor price of zinc worldwide still poses a major challenge, the mine's owners said yesterday.

The Finnish metals company Outokumpu said the mine would produce close to 200,000 tonnes of zinc concentrate in 2003, the target set for the mine last year after a restructuring.

However, managing director Mr Eero Laatio said the price for zinc in the market remained a problem.

"Something must happen, current prices can't continue because the whole zinc industry is struggling. It's in a very poor state," he said

The price of zinc, mainly used in galvanising to protect steel against rust, fell to its lowest price for more than a decade last year.

Three-month zinc is currently fetching around $850 (€754) a tonne, up from around $780 a tonne at the start of 2003.

Mr Laatio, who said he still hoped zinc would hit $1,000 a tonne within the next two years, welcomed the recent closure of some European smelters, which he said would have an impact on easing the worldwide zinc surplus.

"It will have an impact of course, but the question is how quickly, because the stocks are so high. We cannot all survive with these lower prices," he said.

"We also need the global economy to pick up, but your guess is as good as mine on when that might happen," Mr Laatio added.

He declined to comment on the possibility that Tara itself would be forced to shut down again.

He said the company had built a new crushing system at the mine's south-western extension, which would cut costs by removing the need to transport ore across the site.