MINERAL REVIEW AND FORECAST: BASE METALS; LEAD/ZINC

Western World demand for lead and zinc decreased in 1991. Zinc mine and metal production both rose from their 1990 levels, while lead mine output remained essentially unchanged and only a small fall in lead metal production took place. With historically high stock levels on the London Metal Exchange (LME), lead and zinc prices dropped in 1991.

Canadian lead mine output in 1991 rose for the first time in four years despite mine closures, while zinc mine output declined for the fourth straight year. The 1991 increase for lead to 240,000 tonnes from 233,000 tonnes in 1990 was primarily the result of labor settlements. Production cutbacks, transportation problems and several mine closures were responsible for the 62,000-tonne fall in 1991 zinc production to 1.14 million t.

Lead metal output rose in 1991 by 20% to 105,000 tonnes from primary sources and 7% to 104,000 tonnes from the processing of recycled material. Zinc metal production in 1991 was 660,000 tonnes, an increase of 12% from 1990’s figure.

British Columbia

Cominco’s new 160,000-t/y QSL lead smelter at Trail remained idle throughout 1991. Although tests at Metallgeselschaft’s 100,000-t/y QSL smelter in Germany indicated that natural gas could be used as a reductant, modifications in Canada remained on hold. Cominco is considering alternate technology and has shipped zinc residues from Trail to a Kivcet pilot plant in Russia for testing.

Cominco continued to modify its zinc plant at Trail to accommodate concentrates from the Red Dog mine in Alaska. In June, the company announced the layoff of 10% of its workforce. Due to continuing low zinc prices, Cominco is operating its 300,000-t/y zinc refinery at 90% capacity.

At the Myra Falls mine of Westmin Resources, underground diamond drilling intersected two new copper/zinc discoveries known as the Battle and Gap Zones. Westmin began underground development from the H-W mine workings late in the year to reach the new zones by late 1992. To cut operating costs at the mine, Westmin laid off 18% of its workforce in September and switched to cheaper longhole open stoping.

Bethlehem Resources opened its Goldstream mine near Revelstoke in May. The mine has a capacity of 3,000 t/y Zn in concentrate.

Yukon

A 10-week strike at the Faro operation of Curragh Resources ended in June. Non-unionized staff produced about 50,000 tonnes of concentrate during the strike. Nearly exhausted reserves at the Faro mine are to be replaced by ore from the Vangorda open pit, which opened in 1991, and from the Grum deposit, where development is scheduled for 1992. The Faro mill produced approximately 189,000 tonnes Pb and 360,000 tonnes Zn concentrates in 1990.

Curragh opened its $70-million Sa Dena Hes underground lead/zinc/silver mine near Watson Lake in September. The mine has a capacity of 30,000 t/y Pb and 52,000 t/y Zn in concentrate.

Northwest Territories

Cominco’s Pine Point mine, which closed in 1988, shipped the last of its stockpiled high grade lead concentrates during 1991 to the Naoshima smelter in Japan. Mitsubishi became the sole owner of the Naoshima smelter after acquiring Cominco’s 45% interest.

Manitoba

Hudson Bay Mining and Smelting (HBMS) closed its Rod mine at Snow Lake in September due to exhaustion of ore. At the Trout Lake mine, deep drilling from the mine workings continues to delineate several new massive sulphide lenses.

In December, HBMS announced that it would proceed with the $187-million modernization project at its Flin Flon smelter complex. The changes will result in a reduction of sulphur dioxide emissions by at least 25%, airborne particulates by over 50%. The project will ensure that the Flin Flon operations conform to new environmental regulations to come into force in 1994.

Ontario

Noranda closed its Lyon Lake mine and Mattabi concentrator near Ignace in May due to exhaustion of reserves. The Lyon Lake mine had a capacity of 30,000 t/y Zn in concentrate.

At its Kidd Creek mine, Falconbridge cut zinc production by 20,000 t/y due to low prices.

Minnova completed exploration drilling of the Pick Lake massive sulphide deposit near its Winston Lake mine at Schreiber. The deposit contains a reserve of 1.6 million tonnes grading 17.7% Zn and 1.1% Cu in two zones.

Quebec

Breakwater Resources suspended operations at its 500-t/d Estrades mine near Joutel in June. Breakwater will consider reopening the mine when base metal prices improve.

Canadian Electrolytic Zinc (CEZ) encountered startup problems in the new cellhouse at its zinc refinery at Valleyfield. Production was also hindered by a shortage of concentrates as a result of the prolonged strike at the New Brunswick mine. Noranda held 1991 production to below 200,000 tonnes at CEZ due to reduced demand for zinc.

Aur Resources and La Societe Miniere Louvem completed a feasibility study on their Louvicourt massive sulphide project near Val-d’Or. (For more details on this and the Mobrun mine below, see accompanying story on copper.)

Audrey Resources and partner Minnova plan to develop the 1100, B and C lenses beneath the current workings of the Mobrun mine near Rouyn-Noranda.

New Brunswick

Production at Brunswick Mining and Smelting’s (BM&S) No. 12 mine and Belledune smelter resumed in May after a 10-month strike. The company has since undertaken a rationalization program with a 10% reduction in its workforce and the introduction of more cost-effective open stope mining methods.

BM&S also initiated a waste recovery project during 1991. In June, the company announced that it would process 15,000 tonnes of lead-contaminated soil through the Belledune smelter. The soil, transported by rail from an industrial site near Halifax, N.S., was reported to be composed of up to 1% Pb and 50% silica flux.

Heath Steele recommenced development of its C zone in September for production in early 1992. Mining of the C zone will add two years to the life of the Heath Steele mill, currently processing 2,600 t/d of ore from the B and Stratmat mines. In August, the mine also processed a 14,600-tonne shipment of ore from the nearby CNE open pit of Stratabound Minerals.

Nova Scotia

The Gays River mine closed in May after production difficulties were encountered due to poor ground conditions and water problems. In December, Westminer Canada placed the mine and 800-t/d mill up for sale.

Prices and Outlook

The average lead price on the LME in 1991 dropped to US25 cents/lb compared with 37 cents in 1990. Weak demand, particularly in North America, combined with increased production, primarily due to resolution of labor disputes and increased Soviet exports, resulted in an increase in LME and other stocks.

A supply surplus is also forecast for 1992 as a modest recovery in demand is expected to be outstripped by increased production. However, the market could tighten if secondary lead producers are forced to reduce output or close as a result of low profit margins caused by high scrap prices and low metal prices. The average price of lead in 1992 is expected to be about 24 cents/lb.

Zinc prices fell steadily in 1991 as weakening demand combined with rising metal stocks and increased metal production. The average zinc price for 1991 was 51[cents]/lb compared with 69[cents] in 1990.

The outlook for zinc in 1992 is for a further weakening of prices through most of the year as world economies remain in recession. Economic rebound late in the year is not expected to be enough to offset the surplus of zinc metal created in 1990 and 1991. The average price in 1992 is expected to be about 45 cents/lb.