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Recent developments in the southern African zinc industry Paul Fouché Operations Manager Zincor

Recent developments in the southern African zinc industry Paul Fouché Operations Manager Zincor. 6 th Southern African Metals Conference 2011 Phalaborwa , South Africa 18-20 July 2011. Our current business at a glance. Our commodities. Who are we?.

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Recent developments in the southern African zinc industry Paul Fouché Operations Manager Zincor

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  1. Recent developments in the southern African zinc industryPaul FouchéOperations ManagerZincor 6th Southern African Metals Conference 2011 Phalaborwa, South Africa 18-20 July 2011

  2. Our current business at a glance Our commodities Who are we? • We are one of the largest South African diversified resources companies with coal, mineral sands, base metals and ferroalloy assets • We are one of the top 40 companies on the JSE • We employ about 11 000 people • We have access to valuable strategic assets and quality resources • We are a 50%+ BEE owned business • We have an extensive growth pipeline • Revenue: R17,2 billion* • Net operating profit: R2,6 billion* Coalthe second largest coal producer in South Africa Mineral sandsone of the world's top three producers of zircon and chlorinatable TiO2 slag Base metals the only zinc producer in South Africa Iron ore 20% holding in Sishen Iron Ore Company 2 * Annual results for 12 months ended 31 December 2010

  3. Strategy focus • Mineral sands • Board decision to continue with development of Fairbreeze mine • Ramp-up of pigment expansion • Base metals • Progress divestment initiatives • Iron ore • Expand footprint • Energy • Energy security • Clean and renewable alternatives • Safety always, all the way • Exxaro will remain a diversified resources group • Coal • Remain a major reliable supplier to Eskom • Consider mega-mine opportunities to grow the coal business • Increase export allocation and de-bottleneck logistical chain • Develop downstream value-adding products such as char and market coke • Increase volumes to metals markets

  4. Consolidation in zinc world wide and regionally • Global zinc industry (13Mtpa zinc market) • Zinc mining and refining industry highly fragmented • Top 10 mining companies produce only 40% of total market output (vs more than 70% for iron ore from four companies) • Top 10 refining companies produce 44% of total market output • Nyrstar has signaled strategic intent to consolidate refining industry • Regional • Black Mountain and Skorpion acquired by Vedanta/ Hindustan Zinc • Sable Zinc acquired by Glencore Source: Brook Hunt, June 2011

  5. Current concentrate production capability able to meet demand, but: 2010 fairly balanced, from 2011 forecasted tight concentrate market, Exacerbated by major mine closures from 2011 – 2015: Century by 2014 (500ktpa concentrate), Brunswick and Lisheen by 2013 Late/none start-ups could accelerate deficit Future supply capability scenarios: 18 new mines between 2010 - 2025 adding 0,9Mtpa Zn at peak output Expansions or production creep at 40 mines will add 1,5Mtpa By 2025 some 4,8mtpa will be closed due to depletion 19 mines which produced 2,6Mtpa in 2010 will produce only 1,6Mtpa by 2025 (1Mtpa output loss by attrition) Strong zinc price increases expected by 2014-15 Markets and productsZinc concentrate supply-demand Zn Concentrate Supply and Demand Source: Brook Hunt Source: Brook Hunt

  6. Current installed refining capacity sufficient to meet forecasted demand through to 2017 Refined zinc metal in oversupply, to persist till 2013 (concentrate shortage from 2014 onward) Sufficient capacity beyond 2017 to be supplied by: Five new refineries with combined capacity of 0,7Mtpa between 2010 - 2025 Expansions and production creep at 68 refineries add 2,4Mtpa (1,4Mtpa Chinese) Chinese directive to build new refineries of at least 150ktpa capacity No significant closures forecasted Markets and productsZinc metal supply-demand Zn Metal Supply and Demand Source: Brook Hunt Source: Brook Hunt

  7. Rosh PinahMine overview Mine type: Underground mine with historic open pits Production: 680ktpa run-of-mine ore, ~100ktpa zinc and ~20ktpa lead concentrate Depth: Currently down to 400m below surface, with mineralisation up to 800m deep Geometry: Discrete, sub-vertical ore bodies, varying from 0,4 – 2 Mt in size Mining method: Underground, open stope Ore Minerals: Sphalerite (ZnS), galena (PbS), ~chalcopyrite (CuFeS2)

  8. Rosh Pinah explorationGeological potential: on-mine targets SW NE NF B-Mine WF1& 2 C5 conveyor planned EF Low Grade WF3 S1S-S1N potential Lateral ext. to WF3 potential EF-AM2-BAE potential

  9. Rosh Pinah explorationGeological potential: regional exploration targets

  10. ZincorOverview Refinery type: Roast-leach-electrowinning of zinc sulphide concentrate Production: ~100ktpa zinc and 160ktpa sulphuric acid Zinc products: Range includes SHG, Zn2, Zn4, Zincal, pre-alloy in ingot and jumbo shapes Market: Only South African zinc refinery, supply predominantly for local galvanising Raw materials: Concentrate supplied by Rosh Pinah, Black Mountain and imported

  11. ZincorNew residue disposal facility

  12. Regional futureVedanta, the new zinc leader in Africa Medium term: • Gamsberg deposit will be developed by Vedanta (400ktpa) • Skorpion will be closed if no further oxides can be found or sourced or alternatively converted to treat sulphides • Pering Mine may be re-developed • Chinese companies will become more prominent, also as operators • Increased zinc consumption in southern Africa from a broader product range Long term: • Gergarub Mine to be developed with zinc sulphide concentrate product • Gamsberg East could be developed to expand Gamsberg capacity • Kipushi may be developed if a recognized zinc operator can align with owners • Smaller and lower grade deposits in South Africa, Namibia, Botswana, Zambia, DRC and Congo may be developed with concentrate supply to larger operators and traders

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