Recent developments in the southern
African zinc industry
Paul Fouché
Operations Manager
Zincor
6th Southern African Metals Conference 2011
Phalaborwa, South Africa
18-20 July 2011
Our current business at a glance
Who are we?
Our commodities
• We are one of the largest South African
diversified resources companies with coal,
mineral sands, base metals and ferroalloy
assets
Coal
the second largest coal producer in
South Africa
• We are one of the top 40 companies on
the JSE
Mineral sands
one of the world's top
three producers of zircon
and chlorinatable TiO2 slag
• We employ about 11 000 people
• We have access to valuable strategic
assets and quality resources
• We are a 50%+ BEE owned business
• We have an extensive growth pipeline
• Revenue: R17,2 billion*
• Net operating profit: R2,6 billion*
* Annual results for 12 months ended 31 December 2010
Base metals
the only zinc producer in South
Africa
Iron ore
20% holding in Sishen Iron Ore
Company
2
Strategy focus
•
Safety always, all the way
•
•
Exxaro will remain a diversified
resources group
– Board decision to continue with
development of Fairbreeze mine
•
Coal
– Ramp-up of pigment expansion
– Remain a major reliable supplier to
Eskom
•
– Consider mega-mine opportunities
to grow the coal business
•
– Increase export allocation and debottleneck logistical chain
•
– Develop downstream value-adding
products such as char and market
coke
– Increase volumes to metals
markets
Mineral sands
Base metals
– Progress divestment initiatives
Iron ore
– Expand footprint
Energy
– Energy security
– Clean and renewable alternatives
Consolidation in zinc world wide and regionally
•
Global zinc industry (13Mtpa zinc market)
•
•
•
•
•
Zinc mining and refining industry highly
fragmented
Top 10 mining companies produce only 40%
of total market output (vs more than 70% for
iron ore from four companies)
Top 10 refining companies produce 44% of
total market output
Nyrstar has signaled strategic intent to
consolidate refining industry
Regional
•
•
Black Mountain and Skorpion acquired by
Vedanta/ Hindustan Zinc
Sable Zinc acquired by Glencore
Sumitomo Corp
268
Minera Volcan
279
Boliden
310
Vedanta Resources
361
Votorantim
367
Glencore
430
Teck
628
China Minmetals Corp
643
Hindustan Zinc
853
Xstrata AG
1068
0
200
400
600
800
kt zinc in concentrate
China Minmetals Corp
282
Teck
296
Glencore
302
Huludao Zinc Co
1000
380
Boliden
472
Votorantim
547
Xstrata AG
640
Hindustan Zinc
840
Korea Zinc Group
1040
Nyrstar
Source: Brook Hunt, June 2011
1200
1133
0
200
400
600
800
1000
kt zinc in metal product
1200
Markets and products
Zinc concentrate supply-demand
• Current concentrate production capability able to
meet demand, but:
– 2010 fairly balanced, from 2011 forecasted
tight concentrate market,
– Exacerbated by major mine closures from
2011 – 2015: Century by 2014 (500ktpa
concentrate), Brunswick and Lisheen by 2013
– Late/none start-ups could accelerate deficit
• Future supply capability scenarios:
– 18 new mines between 2010 - 2025 adding
0,9Mtpa Zn at peak output
– Expansions or production creep at 40 mines
will add 1,5Mtpa
– By 2025 some 4,8mtpa will be closed due to
depletion
– 19 mines which produced 2,6Mtpa in 2010 will
produce only 1,6Mtpa by 2025 (1Mtpa output
loss by attrition)
• Strong zinc price increases expected by 2014-15
Source: Brook Hunt
Zn Concentrate Supply and Demand
kt Zn
22000
Probable B Projects
20000
Probable A Projects
18000
Possible Mine Life Extensions
16000
14000
Base Case Production Capability
Requirement for Zinc Mine
Production
12000
10000
8000
6000
Source: Brook Hunt
4000
2000
1990
1995
2000
2005
2010
2015
2020
2025
Markets and products
Zinc metal supply-demand
• Current installed refining capacity
sufficient to meet forecasted demand
through to 2017
22000
• Refined zinc metal in oversupply, to
20000
persist till 2013 (concentrate shortage from
18000
2014 onward)
• Sufficient capacity beyond 2017 to be
supplied by:
–Five new refineries with combined
capacity of 0,7Mtpa between 2010 2025
–Expansions and production creep at 68
refineries add 2,4Mtpa (1,4Mtpa
Chinese)
–Chinese directive to build new refineries
of at least 150ktpa capacity
–No significant closures forecasted
Source: Brook Hunt
Zn Metal Supply and Demand
kt Zn
Probable Smelter Projects
World Base Case Smelter
Production
16000
Requirement for Slab Production
14000
12000
10000
8000
6000
4000
2000
1990
Source: Brook Hunt
1995
2000
2005
2010
2015
2020
2025
Rosh Pinah
Mine overview
Mine type:
Production:
Depth:
Geometry:
Mining method:
Ore Minerals:
Underground mine with historic open pits
680ktpa run-of-mine ore, ~100ktpa zinc and ~20ktpa lead concentrate
Currently down to 400m below surface, with mineralisation up to 800m deep
Discrete, sub-vertical ore bodies, varying from 0,4 – 2 Mt in size
Underground, open stope
Sphalerite (ZnS), galena (PbS), ~chalcopyrite (CuFeS2)
Rosh Pinah exploration
Geological potential: on-mine targets
SW
NE
B-Mine
NF
WF1& 2
C5
EF
Low Grade
S1S-S1N
potential
EF-AM2-BAE
potential
Lateral ext. to WF3
potential
WF3
Rosh Pinah exploration
Geological potential: regional exploration targets
Zincor
Overview
Refinery type:
Production:
Zinc products:
Market:
Raw materials:
Roast-leach-electrowinning of zinc sulphide concentrate
~100ktpa zinc and 160ktpa sulphuric acid
Range includes SHG, Zn2, Zn4, Zincal, pre-alloy in ingot and jumbo shapes
Only South African zinc refinery, supply predominantly for local galvanising
Concentrate supplied by Rosh Pinah, Black Mountain and imported
Zincor
New residue disposal facility
Regional future
Vedanta, the new zinc leader in Africa
Medium term:
•
Gamsberg deposit will be developed by Vedanta (400ktpa)
•
Skorpion will be closed if no further oxides can be found or sourced or alternatively
converted to treat sulphides
•
Pering Mine may be re-developed
•
Chinese companies will become more prominent, also as operators
•
Increased zinc consumption in southern Africa from a broader product range
Long term:
•
Gergarub Mine to be developed with zinc sulphide concentrate product
•
Gamsberg East could be developed to expand Gamsberg capacity
•
Kipushi may be developed if a recognized zinc operator can align with owners
•
Smaller and lower grade deposits in South Africa, Namibia, Botswana, Zambia, DRC and
Congo may be developed with concentrate supply to larger operators and traders