Recent developments in the southern African zinc industry
Paul FouchéOperations ManagerZincor 6th Southern African Metals Conference 2011
Phalaborwa, South Africa18-20 July 2011
Our current business at a glance
Coalthe second largest coal producer in South Africa
Mineral sandsone of the world's top three producers of zircon and chlorinatable TiO2 slag
Base metalsthe only zinc producer in South Africa
Iron ore20% holding in Sishen Iron Ore Company
Our commodities
• 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*
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Who are we?
* Annual results for 12 months ended 31 December 2010
Strategy focus
• 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
• 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
Consolidation in zinc world wide and regionally
Source: Brook Hunt, June 2011
Xstrata AGHindustan Zinc
China Minmetals CorpTeck
GlencoreVotorantim
Vedanta ResourcesBoliden
Minera VolcanSumitomo Corp
0 200 400 600 800 1000 1200
1068853
643628
430367361
310279268
kt zinc in concentrate
Nyrstar
Hindustan Zinc
Votorantim
Huludao Zinc Co
Teck
0 200 400 600 800 1000 1200
11331040
840640
547472
380302296
282
kt zinc in metal product
• 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
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Possible Mine Life Extensions
Highly Probable Projects
Base Case Production Capability
Requirement for Zinc Mine Produc-tion
kt Zn
Markets and productsZinc concentrate supply-demand
Zn Concentrate Supply and Demand
• 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
Source: Brook Hunt
Source: Brook Hunt
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Probable Smelter Projects
World Base Case Smelter Produc-tion
Requirement for Slab Production
kt Zn
Markets and productsZinc metal supply-demand
Zn Metal Supply and Demand
• 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
Source: Brook Hunt
Source: Brook Hunt
Mine type: Underground mine with historic open pitsProduction: 680ktpa run-of-mine ore, ~100ktpa zinc and ~20ktpa lead concentrateDepth: Currently down to 400m below surface, with mineralisation up to 800m deepGeometry: Discrete, sub-vertical ore bodies, varying from 0,4 – 2 Mt in sizeMining method: Underground, open stopeOre Minerals: Sphalerite (ZnS), galena (PbS), ~chalcopyrite (CuFeS2)
Rosh PinahMine overview
WF3EF
Low Grade
WF1& 2B-Mine NF
EF-AM2-BAEpotential
S1S-S1Npotential
conveyor planned
Lateral ext. to WF3potential
SW NE
C5
Rosh Pinah explorationGeological potential: on-mine targets
Rosh Pinah explorationGeological potential: regional exploration targets
Refinery type: Roast-leach-electrowinning of zinc sulphide concentrateProduction: ~100ktpa zinc and 160ktpa sulphuric acidZinc products: Range includes SHG, Zn2, Zn4, Zincal, pre-alloy in ingot and jumbo shapesMarket: Only South African zinc refinery, supply predominantly for local galvanisingRaw materials: Concentrate supplied by Rosh Pinah, Black Mountain and imported
ZincorOverview
ZincorNew residue disposal facility
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
Regional futureVedanta, the new zinc leader in Africa