Efficiency Analysis of Zinc Refining Companies

Abstract

Most global zinc firms consist of multiple refineries with various production capacities. However, it is known that efficiency and Bonus Zn are mostly dependent on a firm's production capacity. Thus, it is important to examine whether there is knowledge transfer of efficiencies and Bonus Zn among refineries within the same company, even if their production capacities are quite different. The Data Envelopment Analysis (DEA) is used to measure efficiency scores of forty-two zinc refineries. To examine whether there is a knowledge transfer about efficiency and Bonus Zn within a firm, a propensity score model is newly applied. Additionally, a regression model is utilized to identify whether this propagation is more effective if refineries are in the same country. It is found that about 86% of the refineries are inefficient, which indicates that there is much room for refineries to improve their performance. From the result, it is identified that the knowledge of efficiency and Bonus Zn is transferred within the company. This transfer is particularly influential when both refineries are located in the same country. We also find that firm's revenue can be maximized when efficiency is high and the production capacity and/or Bonus Zn are significant.