Pulacayo Project Feasibility Study - Apogee Silver

Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report
090644-3-0000-20-IFI-100
Silver Price: 3 Years 2009-12 YTD
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Figure 19.12: Silver Prices: 2009 to Present
19.2.3 Zinc and Lead Concentrates Terms Outlook
19.2.3.1 Zinc Concentrates
Zinc provides a perfect example of how different segments of a particular market can completely
diverge. Although the metal market is mired in surplus, zinc mines are struggling to keep pace
with smelter demand for concentrates. The result of this has been a tight concentrate market and
low treatment charges for smelters, which may only worsen with the closure of the
aforementioned mines in the coming years i.e. Perseverance, Brunswick, Lisheen, Century,
Skorpion.
The importance of concentrate supply and the pressure placed on growth in mine capacity is
especially great for zinc due to a lack of growth in the secondary smelting sector. Although a
large proportion of refined lead and copper, for example, is derived from scrap, zinc is almost
entirely dependent on production from primary sources. This is a result of the difficulty and
unprofitability of recycling zinc in most of its principal applications. Most notably, while galvanized
steel by far the largest use of zinc, is widely recycled, it is used as steel scrap rather than
contributing to secondary zinc production.
While growth in Western World mine and smelter capacity is projected to stagnate, Chinese
output will likely be key to determining the extent of market balances in any given year. Although
China has invested heavily in zinc mining, most of its mines are small (less than 30 kt/y) and
have combined zinc lead grades typically less than 10%. Furthermore, a substantial portion of
newly discovered reserves lie in the remoter western provinces. Nevertheless, China continues to
expand its zinc smelter capacity the result of which will be an on-going gap between domestic
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