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Lead - 2007 (Last updated October 5th

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Reports
Publishing Date 05 Oct 2008 12:00am GMT Author Mining Journal
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In 2007, renewed concerns about tight supplies and expectations of strong demand in the final quarter of 2007 pushed the price of lead on the London Metal Exchange (LME) to new record highs, with three months metal trading up to US$3,583/t in early October. The cash settlement price was close to US$3,660/t, which compares with US$1,660/t at the start of the year and US$1,129/t at the beginning of 2006. At around 22,000 t, LME stocks in early October were sufficient for less than one day’s global consumption, and the squeeze on supplies available for immediate delivery was showing no signs of easing. Lead shipments from Ivernia Inc’s Magellan mine in Western Australia had been suspended since March because of environmental problems at the port of Esperance, and a 10% tax on lead exports from China introduced by the government in June 2007 cut shipments by more than 70% in August. China drives demand Annual global demand for lead now exceeds 8.0 Mt, and demand has been increasing steadily, yearby-year, from about 5.5 Mt/y in the mid-1990s. Lead’s use in batteries dominates demand and accounts for 77% of global consumption. Pigments account for about 8% of global usage, rolled and extruded lead for 6%, alloys for 3%, shot/ammunition for 2%, cable sheathing for 1% and miscellaneous uses for a further 3%. The International Lead and Zinc Study Group (ILZSG), whose member countries represent 90% of world production and over 80% of world consumption of both lead and zinc, anticipates that global demand for refined lead metal will rise by 4.1% in 2007 to 8.26 Mt. This will be mainly due to a 12.4% increase in usage in China. In Europe, usage is predicted to rise by 2% and in the US it is expected to fall by 1.3%. China is already the world’s leading consumer of lead (2.2 Mt in 2006) and demand for lead in leadacid batteries is being driven by increased vehicle production and a rapidly expanding vehicle population. ILZSG figures on global automobile usage per population density for 2005 showed 162 people per vehicle in China and 152 in India, compared with just 1.8 vehicles per person in Japan and Europe, and 1.3 in the US. Some forecasters predict that China will account for 50% of global car sales over the next ten years. Supply deficit continues The ILZSG expects that global lead mine production in 2007 will rise by 10.7%, to 3.79 Mt, with the most significant rises in China (11.9%) and Australia (16.4%). However, Ivernia’s new 100,000 t/y capacity Magellan mine in Western Australia, the world’s only pure primary lead mine, has been put on care and maintenance. Magellan has not been able to ship any lead concentrates since March because of environmental problems at the port of Esperance, and consideration is being given to shipments of containerised lead through the port of Fremantle. Elsewhere, production is forecast to increase in Bolivia, Canada, Mexico, the Russian Federation, Sweden and South Africa. Global production of refined lead is forecast to rise by 3.8%, to 8.21 Mt, with a 6.3% increase in China, a 3.3% increase in Europe and higher output in Australia, Kazakhstan, the Republic of Korea and the US. Approximately two-thirds of refined lead production is recycled material. China is likely to be responsible for around one third of the world’s refined lead production this year, but taking into account the fact that the Chinese Government abolished a 13% export rebate on lead metal in September 2006, and introduced a 10% export tax in June this year, exports of refined lead

Mine production additions In 2006. and access to the high-grade Potosi North area is expected to deliver ore to the Broken Hill concentrator in the December quarter. which opened in July 2006. Outlook Although the availability of additional concentrates could ease last year’s shortage of material available to smelters. The deposit hosts approximately 470 Moz of silver.000 t/y Xiacun mine in Sichuan Province. The mine is expected to produce around 84. the new 20. with a shortage forecast at just over 50.36 Mt of lead contained in 231 Mt of open-pittable proven and probable reserves. 3.1% Pb and 43. A production level of some 10. This year.6 Mt of zinc and 1.000 t/y of lead.000 t/y Sasa mine in Macedonia re-opened. The resource currently amounts to some 1. and the underground operation could produce about 50.000 t is expected at the Duddar deposit in Pakistan. is having a significant impact on the supply of refined metal. Acadian Gold Corp brought its Scotia lead-zinc mine at Gays River in Nova Scotia into production in May and should produce around 20. In Canada. this will likely ensure that supplies remain tight and underpin the current high prices for lead on the world markets.000 t.metal from China in 2007 are likely to be far lower than in 2006. In Australia. the decrease in exports of refined lead from China. China.1 g/t Ag.0% Zn.000 t of lead this year.000 t.6 Mt at 13. as a result of the removal of export tax rebates and the imposition of an export tax. and full production was scheduled to commence in the third quarter of 2007. Perilya Ltd is undertaking the staged development of its Potosi project at Broken Hill in New South Wales. Apex Silver Mines Ltd is bringing its 65%-owned San Cristobal open-pit mine in Bolivia into production (Sumitomo Corp 35%). 2007. where Metallurgical Construction Corp of China now has a substantial interest. around 107. and in the Altai region of Russia. Elsewhere. when they reached a record 580. The ILZSG expects that the world market for refined lead in 2007 will remain in deficit for the fifth successive year. Combined with the continuing strong demand for lead by China’s car industry. Mining activities have been contracted out to Washington Group International.000 t/y of lead.000 t of additional lead became available to the market as a result of the reopening or opening of new mines. . the 20.The largest was the 25.000 t/y Rubtsovsky mine came on stream. 3.