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September 2017, No. 85


Mines & Metals

Iran to Emerge as
World’s Key Zinc Supplier Soon


Mehdiabad Mine is of utmost importance to the Iranian lead and zinc industry, as it is the country’s only major source of the minerals.


A consortium of Iranian private companies has signed a deal worth $1 billion with the Iranian Mines and Mining Industries Development and Renovation Organization to develop one of Iran’s largest lead and zinc mines.

According to IMIDRO Chairman Mehdi Karbasian, the consortium is made up of Iran Lead and Zinc Industries and Mining Association and six private companies, led by Mobin Mining and Construction Company.

Mehdiabad Mine is a world-class oxide, sulfide and mixed oxide/sulfide zinc, lead and silver deposit. It has 154 million tons of proven and up to 400 million tons of estimated reserves, 70% of which are zinc and the rest are lead, silver and barite.

According to IMIDRO, the mine’s reserves can reach up to 700 million tons through further explorations.

Operations at the mine started several years ago after a joint venture was formed between the Australian company Union Capital Limited and mining and engineering company Iran ITOK. But after the two investors ran into disagreements with the government over the details of the deal, operations in Mehdiabad came to a halt.

“This project was stagnant for over two decades … Its lack of progress brought us to look for new investors,” IMIDRO public relations quoted Karbasian as saying.

Based on the new deal, the consortium is set to operate the mine for the next 25 years. It is expected to establish two plants producing zinc, and lead and silver concentrate with an annual output capacity of 800,000 and 80,000 tons respectively in four years.

According to Bahram Shakouri, Mobin’s managing director, his company is already holding talks with foreign and local partners for marketing the products and is discussing cooperation with Swiss and Spanish firms to further develop the mine.

Mehdiabad Mine is of utmost importance to the Iranian lead and zinc industry, as it is the country’s only major source of the minerals.

For years, lead and zinc producers relied on Angouran Mine located in Zanjan Province to provide their feedstock. Angouran is one of the oldest mines in the country, extraction from which dates back to the 1960s. Years of exploitation have depleted the mine’s reserves.

According to Angouran Lead and Zinc Complex’s manager Mansour Sheibani, only about 9 million tons of minerals are left in the mine, 2 million tons of which are in underground reserves while the rest are on the surface.

“With the current annual extraction rate of 750,000 tons of minerals, the mine will be exhausted by 2027,” he said.

Global zinc production currently stands at 13 million tons per year with Iran accounting for about 1% of the figure, making it the world’s 19th and Asia’s 7th largest producer of the metal.

Experts believe that the industry has the capacity to boost production, considering Iran’s sizable zinc reserves.

This is while Iranian zinc smelting plants are currently using only 150,000 tons of their 450,000-ton production capacity, according to the head of Iran Lead and Zinc Exporters Association.

Hassan Hosseinqoli also said the lack of feedstock has caused zinc smelters to operate at 33% of their actual capacity.

Mehdiabad has zinc ore grades of between 2 and 4 percent, meaning 800,000 tons of zinc concentrate a year would supply between 16,000 and 32,000 tons of refined zinc to the 13.7 million ton global market annually.

The project had been under consideration since the 1990s but had faced multiple delays.

The mine, located in Iran’s central Yazd Province, holds above 150 million tons of definite reserves of zinc - the world’s second largest.

Mohammad-Reza Nematzadeh, Iran’s Minister of Industry, Mine and Trade, described Mehdiabad project as one which could significantly contribute to the added-value chain of Iran’s mining industry, specifically given its potential to meet at least 4% of the total global demand for zinc. 

Iran has struggled to lure foreign investors since it signed a deal in 2015 with six world powers to curb its nuclear program in return for the lifting of international sanctions against it. 

Global Refined Zinc and Lead metals to Grow by 2% in 2017

The Standing Committee of the International Lead and Zinc Study Group (ILZSG) in its spring session held on April 26, 2017 in Lisbon, Portugal reviewed the current outlook for trends in world supply and demand for lead and zinc during 2017. According to the review, global demand for refined zinc and lead is expected to rise by over 2% each during the year. 

Lead

According to ILZSG, the global demand for refined lead metal is forecast to total 11.39 million tons in 2017, marginally higher by 2.3% over the previous year. The demand growth will be mainly driven by Chinese demand, which is expected to grow by 4.3% over the previous year. The lead metal usage by Europe is forecast to remain flat. It must be noted that the European region had posted nearly 10% jump in usage during 2016. ILZSG predicts flat steady demand growth in Japan and the Republic of Korea. Both India and the US are expected to record demand growth of nearly 1.5% in 2017.

The lead mine production is expected to surge higher significantly by 4.3% over the previous year in 2017. The full year lead mine production is estimated at 4.92 million tons, mainly on the back of ramped-up production from China. The output by other major producing countries such as Canada, Greece, Kazakhstan, Mexico and India are also expected to post considerable growth in 2017. Specifically, higher output is expected from Hindustan Zinc’s Rajasthan operations.

The global refined lead metal production is anticipated to increase by 2.2% year-on-year to 11.39 million tons in 2017, on account of increased output by China and India. It must be noted that world refined lead metal output had increased by 2.8% in 2016. The output by Belgium and the US are likely to show significant improvement during the year. The recently commissioned lead-acid battery recycling plant in Nevada will also contribute to the lead output during the current year, stated ILZSG.

ILZSG anticipates close balance between refined lead metal supply and demand in 2017. Further, the reported inventory levels of refined lead are forecast to remain more or less similar to current total. 

Zinc

The global demand for refined zinc metal is forecast to total 14.30 million tons in 2017, marginally higher by 2.6% over the previous year. The demand had witnessed rise of 3.1% in 2016.

The demand from the European region is likely to remain more or less stable with a modest rise of 0.7% in 2017. The rise in demand in Belgium, Italy and the Russian Federation will be partially offset by reduced demand from France. The apparent usage by the US will recover during the current year. China and India will see rise in refined zinc metal demand, whereas Thailand is likely to report fall in demand. The demand may remain stable in Japan and Korea.

Meantime, refined zinc mine production is forecast to surge higher by 6.7% to 13.70 million tons in 2017. The mine production had declined by 5.5% in 2016. The completion of maintenance works at Hindustan Zinc’s Rampura Agucha operation in India will lead the production recovery. ILZSG forecasts increased output from Peru’s Antamina mine and Finland’s Sotkamo operation. It also expects higher output from mines in China, Australia and Eritrea.

The refined zinc metal output will rise 2.6% to 14.08 million tons in 2017, mainly on the back of rise in output by China and India. Ongoing strike at Valleyfield refinery may badly impact Canadian production. Damages caused by floods may affect production from Cajamarquilla zinc plant in Peru. Similar decline in refined zinc metal production is anticipated from Thailand and Korea.

The global demand for refined zinc metal will exceed supply in 2017, despite sharp rise in zinc mine output. ILZSG forecasts the refined zinc metal to end in deficit of 226,000 tons.

 

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