Global and Regional Developments in Primary

and Secondary Lead Supply

Huw Roberts
CHR Metals Limited, Hamble House, Meadrow, Godalming, United Kingdom

The presentation examines lead mine production, primary refined lead output and, of course,
the very significant role played by recycling in meeting demand for lead covering the period
from 2000 to the present day. While the price of lead is obviously a key factor in
determining supply, it is perhaps a less significant influence on production decisions than is
the case for many other metals. Moreover, primary lead and secondary lead are affected by
somewhat different market factors in addition to price of lead.

Lead mine production, which provides the concentrate feed for primary refined lead output, is
typically a co-product, or more likely a by-product, of some other metal, usually zinc and/or
silver. Only very exceptionally does lead either provide the principal revenue for a mine or is
mined on its own and, therefore, the volume of lead mine production, and hence, primary
lead output, is usually dependent on market conditions for other metals rather than simply for
lead.

Between 2000 and 2008 global lead mine production increased from 3.15 to 3.67Mt. It is
expected that output will fall in 2009 to around 3.57Mt. The slow overall increase in mine
output since 2000 has occurred in conjunction with a significant change in regional patterns
of output. Already, by 2000, Chinese lead mine production was greater than any other
country by a considerable margin; it overtook Australia in the mid-1990s. In 2000, China
accounted for 25% of global lead mine production followed by North America with 22%,
Australia 21%, and all of Europe at 12%. By 2008, Chinese lead mine production was 1.36
Mt, i.e., 37% of the global total.

While there has been a significant change in the regional pattern of global lead mine supply
since 2000, the shift in the regional distribution of primary lead smelter production has been
even more profound. (CHR Metals defines primary lead production as that from any smelter
that treats at least some concentrate even if a substantial proportion of the feed is from
secondary sources, including battery scrap.)

1
In 2000, CHR Metals estimates that primary lead smelter production was 3.63 Mt, with China
accounting for almost 26% of the total in producing 925 kt, followed by Europe with 23%
and North America with 21%. Asia, ex-China, accounted for 16% of the total. By 2008,
total primary lead production had increased to 4.48 Mt. Of this total, China accounted for
2.29 Mt, i.e., more than 50%. In many countries output actually fell between 2000 and 2008,
with a decline of over 500 kt overall ex-China, notwithstanding gains in India, Korea and
Australia. Production losses elsewhere were the result of a mixture of permanent smelter
closures, indefinite suspension of operations, or cutbacks.

The key issue for smelters ex-China in this period was increased competition from Chinese
smelters for concentrates, a direct function of a rapid and on-going increase in primary
smelter capacity. This has been despite efforts by the Chinese authorities to control the
expansion through the introduction of specific standards for technology and plant scale. The
implementation of these standards may, however, be patchy with many smelters permitted to
operate at rates well below their rated capacity. The regional shift in primary lead production
observed since 2000 may not yet have run its course.

The presence of such a large volume of over-capacity in primary smelting in China is an issue
for the global smelting industry. There is a tendency of Chinese smelters to bid aggressively
for feed from overseas by offering very low treatment charges. This, in turn, undermines the
viability of smelters elsewhere in having to compete for concentrate.

So far, the pure secondary lead industry has been largely insulated from developments in
China except insofar as these have affected metal prices. This is because of the Chinese
government’s rather sensible policy of prohibiting the import of battery scrap into China,
even if some does find its way in.

We estimate that 3.43 Mt of recycled lead was produced in 2000. (This figure does not
include 650 kt of lead produced by primary smelters from secondary lead-bearing feed some
of which was battery scrap.) The regional pattern of production is very different from that
seen for mine and primary smelter output. Not surprisingly, the major lead-consuming
regions also dominate recycling activity with 38% and 29% of output in North America and
Europe, respectively. Asia accounted for 27% with China on its own with almost 11% of the

2
total; there was only a relatively small volume in Africa, South America, and Oceania.
Although there was a change in the regional distribution of output by 2008, it is not as
marked as in the case of primary smelting. True, China’s share of global lead recycling has
almost doubled to 20% but the major areas of production remain North America and Europe
with 31% and 24% of the total, respectively. Overall, output in 2008 was 4.46 Mt (not
including more than 1Mt of secondary materials processed by primary smelters), that is, 1 Mt
more than in 2000.

The main reason that there has been less disruption to the regional pattern of secondary lead
production compared with primary lead, due to the emergence of China as a major player in
the global lead market, is that many countries place restrictions on trade and the movement of
battery scrap. It was noted above that China specifically prohibits imports of scrap lead–acid
batteries, but international trade in this hazardous material is also strictly controlled by the
Basel Convention or other bi-lateral arrangements with similar intent. Therefore, it is broadly
true that secondary lead production in an economic region tends to evolve in line with the
availability of battery scrap. Although there is some long-distance or intercontinental trade in
battery scrap, volumes to date have been limited.

There are now relatively few primary lead smelters operating ex-China with just 16
companies accounting for over 75% of the output (ex-China). This is not the case for lead
recycling where the industry, with the exception of the mature economies of Europe, North
America, Japan and Oceania, operates on a fairly small-scale, fragmented basis. In part, this
reflects the limited availability of battery scrap in individual countries and difficulties in
moving the material across international boundaries. In part, it also reflects the existence of
an active informal recycling sector in many countries where tight control of the industry has
yet to be implemented.

This is also a factor in the likely under-estimate of the volume of battery scrap that is
recycled globally. There are many countries where only a small volume of lead recycling is
reported and many more where no secondary lead production is reported at all. In some
cases, lead produced in the informal sector may also be consumed within the sector. An
example of this is where battery scrap is melted down to be used as fishing weights. More
significant will be the manufacture or repair of batteries in backyard operations. When the
price of lead soared in 2007 and 2008, at the same time as there was a sharp decline in refined

3
lead exports from China, many countries, especially in Africa and the Middle East, were
reported to be exporting sizeable quantities of lead ‘alloys’ or bullion. Much of this ‘new’
production found its way to India with little account being taken of the volumes involved
from the point of view of assessing secondary lead production, either at the point of origin or
destination. The ILZSG reports secondary lead production in India in 2008 as totalling just
76 kt (July 2009 Bulletin). Our own estimate is that production was 166 kt and even this may
not fully capture the scale of the industry. There are also serious shortcomings in the
reporting of secondary lead production elsewhere in Asia, through much of Africa, the
Middle East and even in South America.

Informal lead recycling has a poor environmental record. Moreover, because informal
recyclers employ simple technology, incur the cost of few, if any, environmental controls and
escape paying taxes and other government duties, they are typically able to outbid those
companies attempting to work in the formal sector when it comes to securing scrap feed.
This then inhibits the profitable development of formal recycling activities.

Many countries have suffered from this problem. The most significant area of concern today
must be in China where there is now a very large lead recycling industry, much of it within
informal or loosely-controlled sectors. The latter, while operating with the appropriate
licenses, may employ basic technology and pay very limited attention to emissions and
occupational safety. While there are several companies operating in the formal sector, with
more seeking to join, most complain about the difficulty of securing adequate supplies of
battery scrap. And when scrap is found, it is very expensive. Our research over several years
suggests that typically recyclers have paid in excess of 80% of the Shanghai refined lead
price, net of VAT, for the lead content in purchased scrap batteries.

With secondary lead production growing fastest in the emerging economies of Asia, the
Middle East and South America, there is a real problem that informal operators are
accounting for an increased share of total secondary output. This problem is recognised and
organisations such as the International Lead Management Centre is working with the
Secretariat to the Basel Convention to develop and implement programmes in various parts of
the world to help bring more secondary lead production within the formal sector. With the
number of used lead–acid batteries continuing to grow, this is a very important initiative.