Zinc is a bluish-white metal and has the symbol Zn and atomic number 30. It is the first element of group 12 of the periodic table. Zinc is the 24th most abundant element in the Earth’s crust and has five stable isotopes. The most common zinc ore is sphalerite (zinc blende), a zinc sulfide mineral.
Marco Polo (c. 1254 – 1328) described the production of zinc oxide in Persia in the 1200’s. It was almost certainly in India that zinc was first recognised as a metal in its own right. Fast forward to the 18th century and in Bristol, in England, a zinc smelter was already in operation by the end of 1743 producing the metal at a rate of about 200 tonnes per year.
Rolled zinc sheeting is used in roofing and was made mandatory in Paris in 1860 which resulted in a very singular and attractive city landscape and which became famous and iconic and inspired many paintings.
The dominant ore is zinc blende also known as spahalerite which is a zinc sulphide (ZnS). World production is about 12 million tonnes and exploitable reserves are about 180 million tonnes with the biggest reserves in Australia, China and Peru. Who knows but there maybe 250 million tonnes that could be mined if the zinc price was higher and supported the economics to mine.
Zinc’s main use is to galvanise and protect steel. Demand for galvanised steel increases with rising incomes and urbanisation. China currently consumes about 45 percent of world zinc supply driven by investment in infrastructure and urbanisation as a significant part of its population becomes moves from the countryside to cities to seek jobs and a better life. The move from low-come into the middle class drives demand for cars and “white goods” such as refrigerators and washing machines. It is estimated that 350 million Chinese will move to cities over the next decade and urbanisation devours zinc. Galvanised zinc is used for car bodies, fencing, motorway guard rails, street lighting posts, suspension bridges, heat exchangers and roofing tacks. Zinc is used both as the metal and the oxide. More than 50 percent of metallic zinc goes into galvanising steel with other large uses in die-casting of components such as carburettors, and for making brass.
Zinc and Life
Zinc is essential for all living things for brain development and male fertility. The brain requires zinc to modulate its activity as well as to help with learning and to activate those parts of the brain that govern taste and smell. Semen is particularly rich in zinc and there is evidence that a lack of zinc can lower sperm counts in men – “so maybe zinc can put lead back in your pencil”. There is increasing use for zinc as a micro-nutrient in fertilisers and it is believed that it protects plants against drought conditions and diseases. The total amount of zinc in the human body is between two and three grams and is at its highest concentration in the eye, prostate, muscle, kidney and liver..Too much zinc can also be damaging when it is consumed and can cause vomiting, stomach cramps, diarrhoea and fever.
Where do we find it?
The main zinc producing areas are China (3 million tonnes), Australia (1.5 million tonnes), Peru (1.4 million tonnes) and the USA (800,000 tonnes) and Canada (600,000 tonnes) with Iran, India, Ireland and Mexico all with production in excess of 400,000 tonnes.
Geologists like to observe and compare things and put them into boxes and classify. There are five different deposit types and because there are so many variables involved it is not uncommon to see transitions between the five types into what geologists refer to as hybrid-deposits. There are sedimentary exhalative (Sedex) deposits, Volcanic Massive Sulphides (VMS), Mississippi Valley Type (MVT) and Corbonate Replacement Deposits (CRD/Skarn) and Zin Oxide (both hypogene and supergene varieties) – geologists also like acronyms. Irish-style deposits, there is such a sub-group which is very economically important are probably a hybrid between the Sedex and MVT types. If we look at the biggest producers then the Sedex type is the most important with the other four types more or less joint second. The biggest zinc mine in the world is Teck’s Red Dog mine in Alaska. Some of the easiest ores to process with superior recoveries of metal come from MVT deposits. There has however been a remarkable decline in production from MVT deposits. Many classic mining districts have been thoroughly explored, the exploration model is well understood but the “low-hanging fruit” has been picked and new discoveries will be deep and difficult to find because of their nature. Terrestrial oil and gas deposits are in a very general sense commonly spatially associated with MVT deposits and lots of data from oil and gas exploration have not led to the discovery of new MVT districts.
Many zinc mines are relatively small compared to copper mines and so geology has traditionally resulted in a more fragmented mining industry. Of course you can assemble a portfolio of mines to build market share in concentrate production but the top four global zinc miners Europe’s Glencore Xstrata, China’s MMG, Canada’s Teck and India’s Hindustan Zinc and Vendanta control about 25% of concentrate production.
Zinc mines produce concentrates which are sold to smelters to produce the refined metal. A zinc mine needs power to process ores. Zinc concentrate is a bulk commodity with a value of about $1,000 per tonne. A mine needs to ship a lot of concentrate to make money so infrastructure such as railways and ports are needed to transport concentrates from mine to smelter. It is not just about the quality of the deposit that is important but what capital will be required to provide power, rail and ports. At the beginning grade is a proxy for quality and margin but as the project progresses you should find out as soon as practicable at what cost efficiency (recovery) the metal can be extracted from the ore into the concentrate. Ideally you would like to see the mine producing at the lowest quartile of the cost-curve and let the others worry about the rest.
Smelting and Refining
Some mines are “tied” to smelters as part of the supply chain of major integrated zinc producers such as Boliden in Sweden. Some mines sell concentrates to end-users or traders. Some traders such as Glencore concerned about sourcing of zinc concentrate supply have been investing in mines to secure off-take. The market and movement of zinc concentrates is global. Globally most refined zinc is derived from primary sources through new mine production from ore deposits This is likely to be the trend for the foreseeable future.
Most zinc is smelted. Smelting is done by roasting sulphide ore to form an oxide and then reducing this by heating it in a furnace with coke, under an inert atmosphere to prevent the zinc from oxidising as it distils off. An alternative method of winning the metal is to convert the oxide to zinc sulphate and then extract the zinc electolytically. More than 30% of the world’s need for zinc is met by recycling. Most zinc is smelted in China (3.7 million tonnes), Canada (800,00 tonnes) and South Korea (700,000 tonnes), Japan (600,000 tonnes) and Australia (500,000 tonnes).
Who makes the money
Smelter’s make money by paying a percentage of the value of the metal contained in concentrate and also apply a treatment charge. If there is a shortage of concentrate the treatment charge is reduced and if there is ample supply the charge is increased accordingly. The majority of refined zinc goes to the end-user. However there are traders such as that control a substantial amount of third-party trades and it is at the margins that prices are set. The trader is best placed to gauge supply and demand and emerging trends in supply and demand. There is an old saying that the miner gets least, the refiner gets more and the trader gets most – a bit like the farmer and the supermarket chains.