SA’s unassuming role in the global zinc market is about to step up a notch or two, with aggressive expansion by Vendanta Zinc International and newcomer Orion Minerals restarting production from the shuttered Prieska mine, with the companies tapping into what they see as an improving market for the mineral.
South African production of zinc, which is used to prevent iron and steel from corroding and to make alloys, will be 250,000 tonnes a year in concentrate from Vendanta’s Gamsberg mine, rising to 400,000 tonnes in a second-phase expansion and even 600,000 tonnes if a third phase is triggered, says Vedanta Zinc International CEO Deshnee Naidoo.
The Prieska mine will start off with an aspirational 40,000 to 60,000 tonnes a year of zinc in concentrate, barely a blip on the international supply market.
According to a 1991 paper in the Journal of the South African Institute of Mining and Metallurgy, there was concern up to the late 1960s that zinc was not included in SA’s treasure trove of minerals. That changed in the late 1960s, when economic deposits of zinc were found in ore bodies up to 2-billion years old in the Northern Cape.
In the 1980s, SA was hardly a large player in the zinc market, generating between 77,000 and 112,700 tonnes a year in the latter half of the 1980s compared with global output of more than 7-million tonnes.
The plans in place now show vastly higher zinc output from the two new local projects. In 2016, global mined zinc output fell by 7% from the previous year to 11.9-million tonnes. Metal consumption was 13.6-million tonnes, according to a US Geological Survey report.
Glencore, the world’s largest commodities trader, noted recently that zinc prices had shot up by 49% in the first six months of 2017 to $2,687 a tonne compared to the same period in 2016. "During the period, zinc concentrate stocks were depleted and zinc metal stocks were drawn down to levels not seen since 2009, which, combined with healthy zinc demand, drove the zinc price higher," Glencore said, underscoring a generally positive outlook for the metal for some time to come.
The Prieska mine, once one of the flagship South African zinc mines, closed in the early 1990s because, according to Orion CEO Errol Smart, the change and cost involved in mining an ore body that flattened out from being near vertical and had ballooned into a massively thick deposit, was just too much for then owner Anglovaal Mining.
Orion, an Australian firm with a secondary listing in Johannesburg, says an estimated 23-million tonnes of reserves have been left behind by Anglovaal, which Orion is confirming by an intensive drilling programme with 18 drill rigs. This deposit is flooded and it will take up to a year to dewater the underground workings and prepare them for mining. Prieska generated about 1-million tonnes of zinc and just under 500,000 tonnes of copper during its 20-year life, but there is a lot of metal left to be mined using modern mass-mining methods and tweaking historical recoveries with newer concentrating technologies, Smart says.