NATIONAL MULTI COMMODITY EXCHANGE OF INDIA LIMITED Report on Zinc 4th Floor H. K. House, B/h Jivabhai Chambers, Ashram Road, Ahmedabad, Gujarat 380 009 INDIA Phone: 91 79 4008 6039 Fax: 91 79 4008 6040 Email: contact@nmce.com URL: www.nmce.com
Table of Contents Introduction... 3 Brief history of Zinc... 4 Overview... 5 Zinc production... 7 Zinc Processing... 10 a.) Primary Zinc Processing... 10 b.) Secondary Zinc Processing... 10 Supply & Demand... 11 Import and Export... 12 Price Trend... 15 2
Introduction Zinc is the third most used nonferrous metal (after aluminum and copper). The actual name of zinc derives from a German word zink. It was first used in prehistoric times, where its compounds were used for healing wounds and sore eyes and for making brass. It was recognized as a metal as early as 1374. Zinc ore is most often present with combination with other elements. It is extracted principally from sphalerite (Zn, Fe) S, but it is also found in lead ore. Zincite (ZnO2) which is also known as zinc ore is main source from which it is mined. Centuries before zinc was discovered in the metallic form, its ores were used for making brass. The Romans produced brass in the time of Augustus. By 1374, zinc was recognized in India as a new metal. In India both zinc metal and zinc oxide were produced from the 12th to the 16th century. From India, zinc manufacturers moved to China in the 17the century. Zinc was recognized as a separate metal in Europe in 1546. Zinc ores are being mined in more than 50 countries with Australia, Canada, China, Peru and the U.S.A. being the leading producers. Owing to the nature of the ore veins, most zinc mines are underground but some new mines are of the open pit type. In India the Zawar mines in Rajasthan is popular for ungrounded mining Commercially zinc is primarily used in galvanizing and Parkerizing of steel due to its anti corrosion property. It is also used for coating of iron against corrosion. It is also used in alloys such as brass, nickel, lead silver, and typewriter metal, various soldering formulas and German silver. Zinc can store six times as much energy per pound as other battery systems that s why its also popular in battery industry, Zinc metal sheets used in architecture, for roofs or facades, on counters and on bar tops, have a maintenance free life of over 60 years. Zinc can also make the average automobile last longer by protecting vehicles from rust, and also used to make zinc die cast parts like door handles and locks. Zinc Usage Increased during 2005 as the world continues to industrialize. 3
Zinc industry grows simultaneously with the growth of Galvanized Steel industry. In past few years Asia is emerging as a huge consumer of zinc primarily due to increased consumption of China. Zinc consumption continue to amplify as world industrialize. Brief history of Zinc Zinc was largely used in manufacturing brass. Brass is an alloy of zinc and copper. In India there are examples of brass from Lothal and Atranjikhera in 3rd and 2nd Millennia contexts. The discovery of a roll of sheet zinc at Agora in Athens datable to 2nd 3rd century reveals that on that time Indians had mastered the technique of pure zinc and high zinc brass earlier than their counterparts. Zinc smelting began in China in 1552 1566 AD and it was exported to Europe in the end of the 17th Cent AD under the name totamu. Tutenag possibly has its origin in the word Tutthanaga a name of zinc in South Indian languages. Thus there is textual and etymological evidence of transmission of ideas regarding zinc between the two countries. These facts together indicate that zinc was smelted about three centuries earlier in India (in 13 Century AD) than in China. A large body of ancient Indian literature e.g. Mahabharata and Ramayana, Grihyasutra, Arthasastra, Ras Ratnakara, Rasaratnasamucchaya refer to zinc and brass i.e. termed as arakutah, riti or pitala, jasada etc. This literature also reveals the method of production of zinc. Despite the very early occurrences of accidentally produced brass in India, China and West Asia, deliberate pure zinc production was very late. The Zawar distillation industry was a unique phenomenon of Rajasthan, in India, which has stolen a march globally in the earliest production of zinc. The innovation of distillation technique of zinc in India is a glorious chapter in the global History of Science and Technology. The distillation technique and industrial production of zinc goes back to the 12th Century AD and possibly reached China from India in 4
the 16th Century. In fact this is an important contribution of India to the world of science. Overview India is a major zinc producer. The countryʹs extractable lead and zinc reserves are estimated at 390 Mt of ore grading at 8.2% zinc and 2.2% lead. The current zinc production capacity in India is 200 000 tonnes per annum in the primary sector and about 50,000 tonnes per annum in the secondary sector. Generally zinc ores are found in association with those of lead, copper, gold, silver as well as other metals. Rarely is the ore, as mined, rich enough to be used directly by smelters. Mostly zinc ores contain 3% to more than 10% zinc and zinc concentrates wills contain 55% zinc. In India, the bulk of the Lead Zinc deposits occur in Rajasthan. A major multimetal world class deposit of zinc, lead and associated metals had been discovered in the Rampura Agucha belt in Bhilwara district of Rajasthan, which has estimated ore reserves of 60 MT containing 13.5 % zinc and 1.9% lead. 5
Usage of Zinc Zinc is an important metal because of it ability to work well with other metals it is an excellent protector when combined with steel and it forms alloys with aluminium to produce high performance components. The single largest use of zinc is for industrial purpose, with the galvanized industry making up the lion s share of this demand. The brass industry is the second largest component, with more demand from the other alloys industry. In recent year galvanized steel production industry account more then 50% of total zinc usage. Zinc alloys also contribute a large share in zinc use, which made from zinc combined with small amounts of aluminium, magnesium and sometimes copper. The alloys are used in die casting and provide superior casting speed, castability, strength, and hardness, wear resistance and corrosion resistance. Brass and bronze are very popular alloys of zinc and copper in varying combinations, the amount of zinc ranging from 10% to more than 40%. Brass and bronze are largely used in architecture and interior decoration. A much smaller, but potentially very significant, use of zinc is in zinc air batteries for power storage and transport applications. The zinc oxide is used in the manufacture of paints, rubber products, cosmetics, pharmaceuticals, floor coverings, plastics, printing inks, soap, textiles, electrical equipment, and other products. It is also used in medicines like in ointments. Zinc is an essential element in the environment. All living organisms require zinc and in humans it is necessary for correct functioning of the immune system, digestion, reproduction, taste and smell. In the world market Zinc metal is marked in three grades, special high grade (99.995%), high grade (99.95%) and good ordinary brand (98.5%). 6
Zinc production Outstanding to the character of the ore veins, most zinc mines are underground but some new mines are of the open trench type. It is estimated that underground mining is performed in 80% of zinc mines, 8% as open pit, with the remainder being a combination of underground mining and open pit mining. In terms of production volume, however, open pit mines account for as much as 15% with underground mines producing 64%. While 21% of mine production comes from the combination of underground and open pit mining. The supply of zinc in world is based on mine production and small amount is achieved though recycling. Approximately 30% of zinc supply comes from recycling in which brass 42% and galvanizing 27% sector give large contribution and remaining scrap comes from die casting, zinc sheet and from steel industry. Mine Production is surprisingly the largest component of zinc supply. Recently Zinc ores are being mined in Australia, Canada, USA, Peru, Irish, Kazakhstan, India and the China. The notable fact here is that China, Australia, Peru, Canada and USA together account the 2/3 of total zinc production in world. China leads in Zinc production as like many other metals followed by Australia and Peru. Australia, the world s second largest producer of Zinc also contribute very large share in world export. 7
Around 47 per cent of the total increase in world refined zinc production is accounted for by China, where production is estimated to have increased by 5 per cent on a year on year basis, reflecting both higher domestic mine output and new refined capacity. Overall 2005 year total received world zinc production was 10158 thousand tonnes, an increase of 2.6 per cent on the 2004. In 2006, higher refined output is expected from the ramping up of operations at recently commissioned smelters in both China and India. The most significant of these is the Chanderiya plant in India, Chihong and Lanping smelters and the new Yugang Zinc smelter, all in China. So from the year 2004, huge supply was coming from the Asia region and the increasing rate of production in Asia is much better than Europe. Production of refined zinc is forecast to rise by less than 3 per cent to 10.7 million tonnes in 2006. 8
Top 10 Zinc Producing countries in 2004 Tonnes 1 China 2,264,000 2 Australia 1,334,000 3 Peru 1,209,000 4 Canada 790,737 5 U.S.A 738,900 6 Irish 438,300 7 Mexico 426,360 8 Kazakhstan 361,400 9 India 359,700 10 Brazil 158,962 Production in India As like other countries India is also highly dependent on mine production for zinc supply. The mine production was haphazardly increasing from year 2000 to year 2005. In the year 2002 the total India zinc mine production was 198,800 tonnes where as in 2004 the production is noted 359,700 tonnes. Production growth rate is from year 2000 to 2005 is 80%. But with respect to the mine 9
production the slab zinc production growth rate is not equivalent like mine production. Production of slab zinc is slowly increased from year 2000 but in year 2004 it declined from 280000 to 270000 tonnes. Indian output is forecast to increase by a approximately 54% in 2005 year and further 29% estimated in 2006 mainly as a consequence of the recent completion of a 170,000 tonne per year refinery at Chanderiya, Chittorgarh in Rajasthan. Zinc Processing Zinc is often found in combination with Lead. The Zinc Ore is processed through various steps and finally Zinc metal is extracted extractive metallurgy. Zinc is recovered from two process one is from mines and another from zinc scraps. a.) Primary Zinc Processing Zinc ore have very less percentage of Zinc so it is concentrated for further processing. Zinc concentration is usually done at the mine site, prior to reaching the zinc processing plant. The concentration includes crushing and flotation techniques. At the zinc processing plant, the zinc is first reduced using pyrometallurgical methods, including distillation, or hydrometallurgical methods, including electrowinning, calcination, leaching, or purification. The electrowinning process is most commonly used. Electrowinning uses an electrolytic cell to reduce the Zinc. An electric current is run from a lead silver anode through a zinc solution. The zinc deposits on an aluminum cathode and is harvested. The zinc is then melted and cast into ingots. b.) Secondary Zinc Processing Secondary zinc production uses process scrap from zinc slabs, zinc oxides and zinc dust. Selective melting may also be used to capture zinc if the zinc is mixed with other non ferrous metals with higher melting points. Zinc is also often recovered from the furnace dust of galvanized steel making plants. Pyrometallurgical refinement a technique is the most commonly used technique 10
for recovering zinc form scrap. Once obtained, secondary zinc first undergoes a separation process. Magnetic separation, sink float and hand sorting are usually used to remove the zinc from unwanted components. After separation, the zinc is melted with new scrap from brass plants, rolling zinc clippings or die casting. The zinc is melted in a kettle, crucible, reverberatory furnace or electric induction furnace. Flux is used to trap impurities and produces dross that is skimmed from the surface of the molten zinc. The zinc is then either poured into molds or sent to refiners. Supply & Demand Zinc is an important industrial metal, now a day s part of almost everything from Galvanized steel to toys and air battery. Asia s zinc consumption is the highest among the all continents with large decreases in Central and Eastern Europe. China, USA and Japan are largest consumer of zinc as they account 25% China, USA 11% and 6% Japan from the total world consumption. China s consumer share is the largest mainly due to increase in use of galvanized steel and Investment in infrastructure and expansion of housing, automotive and white goods sectors. Galvanizing industry demand has been hastily increasing as a percentage of total use for many years, since the brass and alloys accounting large share from last 11
few year but the consumption pattern of India is bit different from the world market. About 75 per cent of total zinc in India is used in steel galvanizing which is specific to mainly sheet/coil industry. The potential market for galvanised steel, and thus zinc, in the developing markets of China and India is not remarkable. In USA consumption of galvanised steel per capita is over 60kg per person per annum and still growing strongly. In contrast, current consumption in India and China is estimated to be only around 3kg per person per annum that is very less comparing to other developing country. In contrast to the automotive sector, growth in demand for galvanised steel from the world construction sector remains buoyant. In future world Zinc consumption is forecast to grow by 2.5 per cent that is 10.9 million tones per annum. Growth in world Zinc consumption will be dominated by developments within China and the United States. In India demand for refined zinc is growing at the rate of 12 15 per cent annually and is likely to be sustained for next few years. Domestic demand for Zinc is estimated to increase by 9 10 per cent in 2004 05 driven by growth in the galvanizing sector. In domestic industry Hindustan Zinc Limited and Binani Zinc Ltd (BZL), the two major producers of Zinc products in the country, cater to 80 85% of the domestic demand. Demand of refined zinc in India is expected to increase around 4,50,000 tonnes in 2005 06 fiscal from 4,00,000 tonnes in 2004 05, an increase of 15 per cent, out of total supply by HZL and Binani contribution was around 3,35,000 tonnes for year 2004 05 against 2,90,000 tonnes in 2003 04year. Import and Export China Australia, Canada, USE and Peru together account for two thirds of total world production of Zinc. The largest net exporter of zinc concentrate is Australia and Peru, followed by Ireland, Sweden and Mexico. 12
Slab zinc (refined zinc metal) is produced both by mining countries and also by several industrialized countries that have little or no mine production and rely on imports of zinc concentrate. The largest importers are Japan, South Korea, Germany, France, Belgium, Finland, and Netherlands. From 1990 through 2000, China accounted for 63% of metal supply growth, resulting in massive exports but Zinc metal exports from China declined to 465,900 tonnes in 2003 and 223,900 tonnes in 2004. With these declines, China at present is significant net importer of Zinc. Continuous shortages of zinc concentrate showed that it was net importer in 2005 and will also be in the 2006, leading to reduction in metal inventories and upward pressure on zinc prices. Export of Zinc concentrate in India in 2000 2001 to 2004 2005 Year 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 Quantity in MT 11,580 21,315 327,676 62,040 180,704 Import of Zinc concentrate in India in 2000 2001 to 2004 2005 Year 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 Quantity in MT 34,536 68,148 37,549 103,007 81,547 13
India depends for Zinc supply from domestic production as well as imports. As the zinc supply from mine production is not sufficient enough it imports zinc. India s is dependent on Zinc imports while the mine production is growing very fast but still it is not sufficient to meet domestic demand. Imports in the country are generally higher in the year when domestic supply is cut. In the year 2004 05, 180,704 Metric tonnes of Zinc concentrate was exported from India. The exports from India are likely to increase as the some of the major players in Zinc industry like Hindustan Zinc limited India have increased production capacity which will surely improve the India s production. 14
Price Trend Zinc metal futures are traded at London Metal Exchange (LME) that qoutes daily prices of Special High Grade Zinc that is 99.995% pure refined Zinc. Prices for zinc concentrate are also based on LME Prices with credits for copper, gold and silver and deductions for treatment costs and impurites. The year 2004 was deficit to the refined zinc supply, while global zinc metal production increased by 2.7% to around 10.1 million tonnes. But Zinc metal consumption, driven by strong growth in China and North America, outpaced increases in supply and rose by 5.4% to 10.3 million tonnes, resulting in a global supply deficit of more than 200,000 tonnes. The golbal supply deficit in the year 2004 was carried over in the year 2005 resulting beginning of the year with a bullish march in Zinc metal. The year 2005 started with a bullish march of prices and continued trend till March 2005 when they started falling. The prices showed a bearish trend till the middle of July after which they started recovering. After a deep fall the prices continuosly boomed till the end of year 2005. The average prices of Zinc in the year 2005 at LME were 15
USD 1381.55 per tonne which was about 27% more than the year 2004 that were recorded USD 1084.35 per tonne. Lower production from Australia and Peru resulted in tightended supply of zinc concentrates in 2005. This led to a bunce in zinc prices in September and after high voltality in prices it was again started to rise and continued till the end of year 2005. The increasing zinc demand (particularly in the United States and Europe) and ongoing constraints in refined metal output are expected to have supported a further drawdown in LME zinc stocks. World zinc prices are forecast to continue to rise in 2006 as the zinc stocks continue to diminish and vice versa. Zinc prices in domestic market are strongly influenced by prices prevailing in LME. Zinc Slab prices opened with a bullish trend in starting of the year at Rs.78000 per tonne and the year ended recording a hike of about 56% at Rs.122000 per tonne. The average Zinc slab prices ruled in Indian market was about Rs.86397 per tonne. The rise in prices is attributed by global trend, which has been witnessing a bull run in all metals including zinc. Low supply, high demand and influence of international market prices of Zinc, are the main reasons due to which the zinc prices in domestic market tends to fluctuate. As 16
Domestic zinc prices strongly follow international market the prices in the year 2006 are likely to increase due to lower zinc production globally. 17