Lead and Zinc Ores

SIC 1031

Companies in this industry

Industry report:

This category covers establishments primarily engaged in mining, milling, or other wise preparing lead ores, zinc ores, or lead-zinc ores.

Industry Snapshot

The lead and zinc industry consolidated operations gradually after production peaked in 1970: where 88 establishments existed in 1977, only 21 remained in 2009. Manufacturers of lead and zinc intermediate products for industrial use are the principal purchasers of lead and zinc.

In 2009, the United States mined 395,000 metric tons of primary lead, and 21 facilities refined 1.15 million metric tons of secondary lead; 15 of the largest refineries accounted for 99 percent of secondary lead. Most primary lead is mined in five lead mines in Missouri as well as some lead-producing mines in Alaska and Idaho. Lead-acid battery industry, which uses lead in automobile and industrial-type batteries, accounted for about 88 percent of the lead mined in the United States in 2009. In addition, the special properties of lead, especially its resistance to corrosion, make it extremely useful for nuclear insulation and applications such as X-ray protection.

Zinc mining produced 710,000 metric tons in 2009 for a value of $1.18 billion. Six companies operated 13 mines in six states. Zinc is primarily used in galvanizing (55 percent) and in zinc-based alloys (21 percent); it is also used in brass and bronze (16 percent). Alaska's Red Dog Mine is by far the industry leader of U.S. zinc production. Other zinc-producing states included Idaho, Missouri, Montana, New York, and Washington. Over 75 percent of zinc used in the United States is imported.

Background and Development

The mining of lead and zinc ores originated in Colorado in the early 1800s. The production of these base metals became closely intertwined because both were extracted from the same ores--although in different proportions. After recovery, lead and zinc are separated in the smelting process, whereby the ore is processed and reduced to a metal. Until the beginning of the twentieth century, lead and zinc production was strictly a U.S. affair, and before World War II, the United States was generally not dependent on foreign zinc suppliers. During most of that time, exports exceeded imports by a small margin. After World War II, the United States became a small net importer.

Zinc imports increased from 39,000 tons per year in 1939 to an average of 534,000 in 1953. The industry became heavily concentrated during this period, and by 1952, there were 912 lead and zinc mines in the United States, but only 193 of them accounted for 95 percent of the market. A few corporations dominated the industry, with ten companies controlling 65 percent of total U.S. lead output and ten companies controlling 62 percent of the zinc market. Of those corporations, seven dominated in both groups. Control of the smelting market for zinc and lead ores was even more concentrated.

U.S. firms soon lost their competitive position internationally as the demand for lead and zinc expanded far faster than domestic production. Foreign producers expanded production and sent large quantities of their surpluses to the United States. The market shift coincided with the termination of price controls in the United States in 1946 and the suspension of import duties for several years following World War II. These tactics were needed because the war had depleted the country's stocks, yet demand from the U.S. government increased with the onset of the Korean War.

By the late 1960s, imports of zinc exceeded domestic production by more than 50 percent, and domestic production of lead just barely exceeded imports in 1969. Secondary production of lead (essentially from scrap) overtook primary production, reaching more than one-half of total production in the late 1970s.

An overall downturn in lead and zinc mining began in 1970. By 1980, U.S. production of zinc fell to less than 10 percent of total world production, and Soviet and Japanese companies accounted for much of the world market. Total production indexes for the industry as a whole reveal a decline of nearly one-half from 1970 to 1986. During the 1980s, lead production declined by more than 10 percent, but zinc production increased by more than 50 percent. The loss of several key markets for lead, including the abandonment of lead as an anti-knocking additive to gasoline and the discontinued use of lead as an insulator in water pipes, contributed to lower demand beginning in the 1970s. The use of lead in products that might come into contact with humans (such as paints and pipes) was gradually curtailed because of the risk of lead poisoning, and studies suggested that exposure to lead impaired brain development in children. The U.S. Bureau of Mines projected that annual lead demand fell at a rate of 0.5 percent to 1.5 percent per year in the 1990s.

Tariffs on zinc were phased out gradually as part of the U.S.-Canada Free Trade Agreement of 1989. That situation, combined with the rollback of world trade barriers, encouraged competition on the part of Mexican and Peruvian zinc products to seek duty-free markets in the United States. Finally, after the fall of the Soviet Union in 1989, lead and zinc from its former member states flooded the world market, putting downward pressure on prices. The Bureau of Mines estimated the world reserve base of zinc at 400 million tons and reserves at 150 million tons, with the United States having the largest reserves. The world reserve base was approximately 120 million tons at the end of 1995.

A series of circumstances caused lead and zinc prices to fluctuate in the early 1990s. Initially, a strike at Doe Run Company, one of the country's primary producers, created a decline in production; but a subsequent strike at the Trail smelter in Canada led to price increases. Later, in 1996, Doe Run experienced a loss of an estimated 5,400 metric tons of lead production as the result of a shutdown for a furnace repair at a secondary lead smelter in Boss, Missouri. Around that same time ASARCO, Incorporated, announced the indefinite closing of its Leadville, Colorado zinc-lead-silver mine but reversed that decision in early 1997 and resumed full production. Zinc prices, which had dropped during 1996, turned steadily upward in early 1997 as the U.S. economy began to recover from an earlier recession, and consumption rose by eight percent.

The expansion of the secondary (recycled) lead supply--70 percent of total production--combined with improved methods for primary production contributed to a market surplus in the late 1990s. However, by the early 2000s, decreased production at smelters and refineries in the United States, as well as in Europe and Australia, prompted the International Lead and Zinc Study Group to forecast a balanced supply and demand of lead by 2003.

In the early 2000s, low interest rates fueled new home construction in the United States, which boosted zinc consumption by industries such as construction that use galvanized steel extensively. In fact, this industry proved to be the only consistent U.S. market for zinc in the early 2000s. Although worldwide zinc consumption increased by three percent in 2002, weak domestic demand prompted seven zinc mines in the United States to shutter operations in 2001. As a result, zinc production in 2002 declined by seven percent.

Domestic mine production of lead in 2006 stood at approximately $715 million. The primary demand for lead in 2006 resulted from growing demand for rechargeable automobile batteries--in fact, lead-acid batteries accounted for 89 percent of U.S. lead consumption (1.4 million metric tons of 1.56 million metric tons). This was followed by ammunition (65,300 metric tons) and casting metals (29,900 metric tons). Secondary (recycled) lead supply expanded to 88 percent of total production in 2006.

The properties of zinc as a corrosion inhibitor make it valuable for the galvanizing process, and the rubber industry uses zinc oxide in making white paint and pigments. Production of recoverable zinc decreased by 3 percent from 2005 to 2006, at 699,000 metric tons. Consumption levels in the United States increased from 1.29 million metric tons in 2005 to 1.39 million metric tons in 2006, due to a rise in apparent refined zinc.

Current Conditions

Demand for lead and zinc was low during the late 2000s due to a global recession. According to the U.S. Geological Service, U.S. industrial minerals mine production declined by 18 percent in 2009 to $35.8 billion. However, American Metal Market announced shrinking lead and zinc surpluses in July 2010 as demand for surpluses increased, according to a report by the International Lead Zinc Study Group (ILZS). In addition, in May 2010, lead mining production rose by 4.6 percent compared to the previous month, and refined lead production increased by 2.2 percent. Global demand for lead increased from January to May by 3.6 percent, indicating a recovery of a sagging economy. Over the first five months of 2010, zinc surpluses fell by nearly 20 percent. Worldwide zinc production was up over the first five months of the year by 14 percent, compared to the same period of the previous year, and global demand for zinc was up by over four percent.

Lead producers in the United States were anticipating a better start to the 2010s because U.S. demand was on the increase as the economy began to rebound. Lead, which is fairly resistant to recessions due to the ongoing necessity for batteries, was expected to be helped by an uptick in the economy as dealers began to replenish depleted inventories in anticipation of increased consumer spending. In addition, China, the world's largest supplier and exporter of lead, had shut down several of its lead smeltering plants due to heavy metal exposure incidents, causing a tightening of supply. As a result of lower supply and higher demand, lead prices doubled during 2009.

Demand for zinc also increased during the first six months of 2010, primarily due to increased activity in the automobile industry. Similar to suppliers of lead-based products, suppliers of zinc-based products moved to restock depleted inventories as consumer activity began to pick up. In response to increased demand, U.S. Zinc announced an increase in its prices by 8 to 10 percent in July 2010, primarily to offset higher transportation and raw material charges.

Industry Leaders

Doe Run Company of St. Louis, owned by New York's Renco Group, is the largest primary lead producer in the world. U.S. Zinc is owned by Votorantim Metais, one of the top five zinc producers in the world and the largest producer of zinc oxide. Vancouver, British Columbia-based Teck Resources owns Alaska's Red Dog Mine, the world's largest zinc mine. In 2010, with ore in the main pit nearly depleted, mine operators were applying for special permits that would allow mining in a secondary pit, but environmentalists were protesting Red Dog's request to release waste waters into the local waterways.

America and the World

Lead is mined in 38 countries, but the leading five countries comprise nearly 80 percent of production: China, Australia, the United States, Peru, and Mexico. In 2009, the United States imported most of its lead from Canada (70 percent), with smaller quantities coming into the country from Mexico (10 percent), Peru (7 percent), and China (5 percent). The United States imports over 75 percent of its zinc demand. The U.S. supply of zinc comes primarily from Canada (55 percent) as well as Peru (15 percent) and Mexico (15 percent).

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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