Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
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BASE METALS contribute 800,000 mt/y of zinc and 150,000 mt/y of lead. With expected mine closures, the zinc industry will need to develop about 7 mil- lion mt of new mine capacity by 2020 and about 14 million mt by 2025 in order to meet expected demand, he added. Comparable figures for new lead-produc- tion capacity would be 2 million mt/y by 2020 and 4 million mt/y by 2025. Xstrata is currently expanding capa- city at its George Fisher mine in Queensland, having already undertaken a deepening at its Black Star open-pit. An expansion at its McArthur River mine is targeted to come on stream in 2014, while construction began last year at its Lady Loretta deposit, where capex of A$460 million has been identified. In April, Xstrata confirmed A$87 million in addition expenditure to boost its zinc production by 5%, with accelerated development at Lady Loretta and an extension to Handlebar Hill. Which Way Now? Although there are concerns over the future supply and demand balance for zinc, much of the current attention is on copper. According to IntierraRMG in a report earlier this year, "new mine pro- jects will begin to impact the rate of cop- per supply growth from 2013, with annu- al rates of increase in excess of 4% per year. However, given an expected modest revival in consumption growth and a reduced contribution from scrap, the supply-driven slide into surplus will be gradual rather than dramatic," the com- pany suggested. In its BME Copper Quarterly Report, IntierraRMG noted that it expects the refined copper market to remain close to balance this year and next, but to be sub- ject to larger surpluses by 2015-2016. In terms of price predictions, the com- pany's director for base metals, Paul Dewison said: "With the physical market for copper remaining quite tight through 2012 and 2013, prices are forecast to remain within sight of $8,000/mt. As the impending surplus becomes more evident late in 2013 and into 2014, prices should reduce to around $6,000/t in 2016." For zinc, the situation is somewhat different, of course, with the projected imbalance between capacity gained and lost helping to eradicate the supply sur- pluses of recent years. Quoted by Bloomberg in an article published last www.e-mj.com JUNE 2012 • E&MJ; 95 October, Gavin Wendt, senior resource analyst at Mine Life Pty, said: "I'm bull- ish with regards to zinc over the next two to three years and even longer. "Given the level of underlying demand for zinc and at the same time the fact that new reserves are not being added, there is going to be a supply-side problem to emerge over the next few years." As with so many commodities, the world's mining companies are becoming increasingly reliant on China to keep demand for base metals strong. Because of this, producers have managed to weather the economic storm in remark- ably good economic shape. The big ques- tion remains, however—how long can they continue to do so?