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Key countries set to boost global zinc production

16th August 2019

     

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Global mined zinc production will continue to ramp up as strong zinc prices prompt miners to bring idled capacity back on line and invest in new projects, according to analysis and consultancy company Fitch Solutions.

While some capacity taken off line over 2015 to 2016 is the result of permanent mine closures, the return of some stalled capacity and new projects in key countries will drive growth over the coming quarters.

Fitch, in its Global Zinc Mining Outlook in June, forecast global zinc mine production to increase by 2.1% year-on-year in 2019 to 13.3-million tons and then increase to 15.8-million tons by 2028, averaging a 2% growth.

China

China’s zinc production will stagnate, owing to declining ore grades and increasingly stringent environmental regulations. The conservation of minerals and increasing consolidation of mining industries outlined in China’s thirteenth five-year plan will weigh on zinc output in China, according to the report.

Additionally, the strong support for State-owned enterprises (SOEs) in the plan will ensure that China’s zinc industry remains dominated by SOEs, with increasing consolidation of smaller miners. Since August 2017, operations at about 60% of zinc and lead mines in the Sichuan province have been suspended, owing to ongoing environmental inspections. In the first half of 2017, mining and nonferrous processor China Polymetallic Mining recorded a slight decline in zinc feed grades to 3.1%, and subsequently saw zinc output contract by 10.6% year-on-year at the Dakuangshan mine.

Fitch forecast the country’s zinc production to edge higher, from 4.3-million tons in 2018 to 4.4-million tons by 2028, averaging 0.2% yearly growth. Despite this muted growth rate, China will remain the largest global producer of zinc by a wide margin. It also forecasts China’s position to erode from 33% of global mine production in 2018 to 28% by 2028. Dominant producers will include domestic miners such as Zijin Mining, which plans to produce 270 000 t of mined zinc.

Australia

Australia’s zinc sector, meanwhile, will gradually recover as rising prices prompt miners to restart major operations. Fitch Solutions forecasts the country’s zinc production to increase from 940 000 t in 2018 to one-million tons by 2019, supported by the fully operational Dugald river mine.

“By 2028, we expect zinc production to reach 1.3-million tons on the back of rising zinc prices and a solid project pipeline. Junior miners will continue to advance zinc projects in Australia, given the positive outlook for zinc prices over the coming years. Australia’s key new zinc project, belonging to mining and exploration company Minerals and Metals Group, Dugald river began production in November 2017 and has guidance for 165 000 t to 175 000 t of zinc in 2019.

India

India will increasingly drive global zinc production growth, as the country’s key miner Hindustan Zinc implements a large-scale expansion plan. This commissioning of various projects has occurred and will continue to happen this year, allowing for mining production gains in both 2019 and 2020. For example, at the Zawar mine, a new two-million-ton mill was commissioned in the first quarter of this year and a dry tailings plant is expected to be commissioned in quarter three of 2019.

Another example is Sindesar Khurd, one of the world’s largest zinc mines which processed 3.9-million tons of ore in the 2018 fiscal year, which ended March 31, 2018. The firm commissioned an underground crusher and production shaft in quarter one of 2019 and commissioned an ore hoisting shaft in quarter two of 2019 which enabled additional processing.

The solid pipeline of projects coming on line will boost zinc/lead mine production capacity to 1.2-milion tons in fiscal year 2020. Fitch maintains a solid production growth outlook for the country, forecasting zinc output to increase from 876 000 t in 2019 to 1.4-million tons by 2028.

Peru

Peru’s zinc output is forecast to increase to 2.1-million tons by 2028 from 1.6-million tons in 2018, averaging 2.9% yearly growth. Fitch believes that increases in production at the Antamina copper/zinc mine from processing more copper/zinc ore, along with nonferrous metal smelting company Korea Zinc’s expansion at Pachapaqui and mining company Nexa Resources beginning production at the Shalipayco mine, will support growth in the short term.

At Antamina specifically, production will first decline in 2019 to 300 000 t from 409 000 t in 2018, owing to mine sequencing before jumping to 440 000 t to 490 000 t over 2020 to 2022. In the long run, higher zinc prices will incentivise firms to move forward with projects within the pipeline, supporting further growth. Peru has the third-highest number of new zinc projects in the pipeline at 12, according to Fitch’s Global Mines Database.

Edited by Mia Breytenbach
Creamer Media Deputy Editor: Features

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