South African metals and mining group Billiton has signed an exclusive agreement with Yunnan Lanping Nonferrous Metals to develop a feasibility study for potentially the mainland's largest foreign-controlled zinc mine. Billiton yesterday said initial estimates showed that the mine was capable of producing 250,000 tonnes of zinc annually, with an initial capital cost of US$500 million. 'This agreement is a significant step forward for Billiton's activities in China, and for our base metals business,' Steve Keseler, Billiton's executive director responsible for new business, said. If the feasibility study proves fruitful, Billiton will be granted management control, which could give it 51 per cent of the venture, although this would not necessarily be reflected in terms of earnings. The deal follows an announcement in June when Billiton said it had entered into two ventures in Yunnan. The first was a non-exclusive co-operative pact for the possible development of zinc-lead ore with Lanping, while the second was a $1.4 million joint venture with Yunnan Dianxi Geological Exploration and Mining Development, exploring base metal deposits. Success in the Dianxi venture means Billiton could see its share rise to 90 per cent through further funding of exploration programmes. A Billiton spokesman said the new agreement with Lanping, which is to initiate pre-feasibility studies and negotiate a joint-venture agreement, had come in the face of competition from several other mining groups, including Canada's Cominco. Billiton stressed the project was still at a very early stage of development.