But I don’t think there is too much rush to jump in just yet, considering this market (ASX and zinc) probably has further to fall and this is a more long term trend I’m focussing on. But as with any long term prediction, it is still extremely difficult to predict with great accuracy. I am just trying to supply the facts and hope people will join in an attempt to put together a better fundamental picture of the metal going forward. If I continue to see mine closures and project delays occurring this will re-affirm my initial position of strong outlook for the metal going into 2010. But then again there is also a risk that the demand side of things won’t hold up either. So it depends also what your views are on demand for resources long term.
Things are taking shape.
Not only are these zinc mine closures good for zinc, but considering lead is a significant by product of many zinc mines it will surely be starting to cut pretty deep into an already short supply of lead. Normally after considerable mine closures in an economic cycle this can often suggest we are working towards a bottom in the market. However if zinc prices remain this low for a little longer it will be much better for the lower cost producers in the long run given >50% of global zinc production is operating at a loss at present. Nickel also looks to be in a similar position with news of mine closures starting to become a more regular occurrence.
Bits and pieces of this list have been taken from Reuters, but unfortunately I know longer know which parts as this has been constructed over time.
Nov 25 – OZ Minerals (OZL) announced it will cut zinc production at its Century mine by 20,000t p.a. from a forecast of 515,000t in 2008 to 495,000t in 2009. It stated that development of its Dugald River zinc mine in North Queensland would not commence in 2009 and be deferred until the external environment became more favourable. The company also said the current resources at its Izok Lake and High Lake deposits in Northern Canada were not substantial enough to justify the capital expenditure necessary to build a producing mine.
Nov 20 – Teck Cominco has decided to cut production at its Trail zinc operation in Canada by 4,000 – 5,000t of contained zinc per month (approx 50,000-60,000t p.a.) or around 20% of 2007 production (290,000t Zn). The duration of this curtailment depends on market conditions, but will likely continue for at least six months. Lead production at Trail’s smelter will not be affected.
Nov 7 – CBH Resources (CBH) advised the market that it will further cut production at its Endeavor mine in Broken Hill in an attempt to push cash costs down to around $0.55-$0.60/lb. Production in 2008/09 is anticipated to fall to approximately 40,000t of contained zinc and 20,000t of contained lead. Production in 2009/10 has also been earmarked for production cuts with production anticipated to fall again too approximately 25-30,000t of contained zinc and 12-15,000t of contained lead. Managing Director Stephen Dennis also said at the companies AGM on the 11th of November that if prices continued to stay low or decline further the company could not guarantee the future viability of the Endeavor mine.
Oct 30 – Kagara Ltd (KZL) stated that although it was still in a positive operating cash flow position, zinc production would be around 15 -20% lower than the previous year (41,000t contained zinc). But the real impact of lower zinc production from Kagara would be as a result the result of the deferral of current construction at the Mungana treatment plant which was anticipated to produce approximately 50,000t of contained zinc annually with significant by-product credits at a cash cost of <$US0.30/lb from mid 2009 onwards.
Oct 21 – OZ Minerals Ltd (OZL) CEO & Managing Director Andrew Michelmore said that partial curtailment at the world’s second largest zinc mine, Century was being weighed up, given that the mine was operating at a loss at current zinc prices. “Zinc in the ground is worth a lot more in the future than it is now,” Michelmore said. “So we need to ask ourselves, what’s our cost of leaving it there.” There was no timetable set out for taking a decision on Century’s future, “though there is no way we would want to keep producing if we are making cash losses there,” Michelmore said. In addition the company stated that the timing of the Dugald River zinc development in QLD will likely be delayed until conditions improved. Dugald River was initially expected to produce 200,000t of zinc p.a. from around 2011.
Oct 17 – Blue Note Mining Inc announced that it will be initiating a temporary care and maintenance program at its Caribou and Restigouche zinc and lead mines. Despite excellent operating performance, current zinc and lead prices make the mine unprofitable. The processing plant and mine infrastructure are being prepared for the orderly suspension of all activities. Blue Note commenced mining in July 2007 and achieved commercial production as of January 1st, 2008 producing approximately 36,000t of zinc and 19,000t of lead to date in 2008.
Oct 9 – Strategic Resources Acquisition (SRA) said it would be initiating a temporary care and maintenance programme at its wholly-owned Mid-Tennessee zinc mining complex (MTZ). The company said that since production began at the Gordonsville mine in April 2008, cash costs per pound of payable zinc had been well above prevailing commodity prices.
Sept 26 Lundin Mining The Galmoy zinc-lead mine in Ireland will begin a three-year phased shutdown in December, a union spokesman said. The mine produces about 70,000 tonnes of contained zinc and 19,000 tonnes of contained lead a year. The mine will shut down completely in 2011 when the mine reaches the end of its natural lifespan.
Sept 23 – OZ Minerals Ltd (OZL) said it plans to cut zinc production in 2009 at its Golden Grove mine in Australia by 35-40% of planned 2008 production (130,000-135,000t contained zinc), in response to weak prices.
Sept 8 – Intec Ltd said it had suspended operations with immediate effect at its Hellyer Zinc Concentrate Project (32,000t contained Zn), citing several reasons including low zinc prices and rising production costs.
Aug 29 – Angus & Ross Plc said it has delayed further construction at its high grade Black Angel zinc/lead mine in Greenland until next year, due to troubles in securing project financing and falling metal prices.
Aug 21 – HudBay Minerals Inc said it is closing the Balmat, New York zinc mine and concentrator on Aug 22 because of low prices for the metal. The mine, which restarted in January 2007, was earlier expected to produce at around full capacity of 60,000t p.a. of contained zinc in 2008.
Aug 21 – Perilya Ltd (PEM) said it will cut its zinc production by almost half in the face of low metals prices and will wait for a rebound in the commodities cycle before resuming full operations. Mining of ore this year from the firm’s Broken Hill deposit will almost halve to 950,000 tonnes, a level forecast to yield 55,000 tonnes of contained zinc compared with 91,000 tonnes a year earlier.
Aug 20 – CBH Resources (CBH) said that it has placed its development project in Broken Hill (CML-7), which was expected to produce around 32,000t of contained zinc & 25,000t of contained lead p.a., on hold.
Aug14 – Strategic Resources Acquisition (SRA) said in its third quarter results that, as at June 30, 2008, its mining operations were not profitable near term on a sustainable basis. This assessment was based on results of mining operations, including costs of mining and recoveries and prevailing zinc prices. The company said it needed to raise additional financing and/or refinance its short-term debt to enable it to remain in operation beyond October 2008. SRA revised its production forecast for calendar 2008 to about 25 million lbs of payable zinc versus previous estimates of about 100 million lbs, citing delays and lower than expected productivity and mill recovery during production ramp-up.
Aug 7 – Lundin Mining announced that it was reviewing its options for its Aljustrel zinc mine in Portugal given it was a high cost producer in a low zinc price environment. Options include a possible early extraction of known copper resources at the site. Aljustrel is in start-up mode and produced 30,000t of contained zinc which was less than the expected 51,000t of contained metal.
July 17 – Australia’s Aim Resources (AIM) said it plans to suspend development activities and place the Perkoa zinc mine in Burkina Faso on care and maintenance due to the funding problems as a result of the credit crises and depressed zinc prices. At full capacity the mine was expected to produce around 70,000t p.a. of zinc in concentrate.
July 14 – Teck Cominco & Xstrata Ltd said they would close the Lennard Shelf lead-zinc mine in WA in August. The company said rising costs, lower metal prices and a stronger Australian dollar had made it uneconomical. The mine, which was brought out of care and maintenance in early 2007, produced around 42,000t of zinc and 12,400t of lead in 2007 and had been scheduled to remain in operation until 2011.
