Zinc

Zinc Global Market Outlook

MARKET OVERVIEW

Global Zinc Production: 12.6 MMT (2023 E)

Global Demand CAGR: 2-4% (2022 – 2025F)

• Global zinc mine production is expected to total 12.6 million tons in 2023 from 12.4 MMT in 2021, majorly driven by  Chinese plants, as they continue to ramp up their output in order to meet the ongoing domestic demand

• The global metal consumption is expected to reach 15.1 million tons by 2026

• China is by far the largest producer of Zinc in the world, with 33 percent market share by volume, followed by Peru and Australia. China also accounts for almost half of global Zinc consumption, followed by the US, India, and South Korea

Zinc Global Market Overview: Production and Consumption

• Chinese mine production fell in 2022 and especially during Q3 2022, which was 5.8 percent lower on a yearly basis. This was primarily owing to China’s Zero-Covid policy and associated lockdown restrictions

• Peruvian mine production was also affected, due the end-of-life closure of the Iscaycruz mine in the earlier years

• Canada’s output was also reduced, owing to the closure of the 777 mine, due to depletion of its reserves. However, this was offset by a rise in production in its North American counterpart at the Red dog mine in the US

• The Ozernoye project in Russia has been delayed and operations are now expected to start in 2024. However, the ramp of the man to its capacity of up to 360,000 tons of zinc per year will take several years

• Refined zinc consumption rose by 1.9 percent year-on-year in Q3 2022, a sharp rebound compared to the fall of 8.7 percent in the earlier quarter. The overall rise in the long-term demand is expected to be supported by recovering vehicle production and infrastructure spending in China

• China accounts for about 33 percent of global Zinc production and about half of the global Zinc demand. The growth is expected to slowdown to 1.1 percent from by 2029

• Zinc production is expected to reach 12.9 million tons by 2024 and the forecasted metal consumption is expected to reach 14.4 million tons by 2024, indicating a supply constraint

Zinc Market Overview : China

• China accounts for 33 percent of global Zinc production, which is expected to fall to 26 percent by 2029

• China accounts for 40–50 percent of global zinc demand, largely driven by steel industry and their infrastructure projects

Market Update:

• Declining ore grades and stringent environmental regulations will lead to China’s Zinc mine production to stagnate over the long term with growth of 0.3 percent annually until 2029

• Declining zinc prices and treatment charges, due to demand shock from the pandemic, has resulted in reduction in mine and metal output from China

• China dominates the global production of both Zinc Mine and Zinc metal with demand from Chinese smelting industry a major driver of Zinc mine

• Social inventories of zinc ingots across seven major markets in China totaled 181,300 mt on February 24, down 3,200 mt on a weekly basis

Cost Structure Analysis – Zinc

• Direct cost accounts for around 71 percent of the entire cost required which includes onsite operating consumables as well as offsite transport and treatment costs

• Indirect costs contribute to around 29 percent of the overall costs, which include corporate and royalties, mine-site general expenses and administrative, and maintenance costs etc.

• Zinc processing plant requires a high capital investment, these plants are usually near the mines. Investment costs vary considerably between mining operations

• Below chart shows the cost incurred  to produce 1 pound/ton at processing stage, from mining through to recoverable metal delivered to market. Processing plant accounts for major pie of the cost with 58 percent