Red-hot global zinc prices helped Vancouver-based Lundin Mining boost its operating profits at its Galmoy mine in Co Kilkenny in the first six months of this year in spite of a fall in production.

Galmoy's operating profit in the six months to the end of June grew by 23 per cent to $14 million (€10.4 million) even though its zinc output fell by 24 per cent.

Lundin's results highlight the high-cost nature of its Irish operation relative to its mines in other European countries. Galmoy's $14 million operating profit was achieved from a revenue base of $52.6 million. That's a margin of 26.6 per cent.

Its Storliden mine in Sweden achieved a similar operating profit from revenues of $39.2 million, giving it a margin of 35.7 per cent.

There could be more trouble in store on the cost front for Lundin investors, who include Sir Anthony O'Reilly and his family.

Workers at the mine have rejected a pay increase offer of 10.7 per cent over 27 months in a dispute which dates back more than a year.

Siptu's 100 members voted to reject Labour Court recommendations on August 4th, while 40 mechanics and electricians affiliated to the Technical, Engineering and Electrical Union have been in an official dispute with the company since mid-June.

Lundin recently reported that exploratory drilling near the Kilkenny mine encountered ore with a zinc grade of 44 per cent. This is more than three times the grade being achieved at Galmoy and, if proven, would yield a cash bonanza for Lundin given the insatiable demand for zinc globally.

It's a point that won't be lost on the workers.