CRU: Can the Lead Mine Project Pipeline Step Up

LONDON, July 18, 2017 /PRNewswire/ --

After several years of surplus, the refined lead market is moving into deficit this year, driven largely by shortfalls in primary raw material availability. The global concentrates deficit has already started to bite, with miners able to successfully negotiate a substantial decrease in contract TCs for 2017.

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Market deficits bring renewed interest in mine projects but the pipeline of lead mine projects outside China looks thin for the next few years. Most sizeable greenfield projects in the pipeline are not far enough progressed for their development to be accelerated to fill the emerging deficit, but we can see additional production coming on stream from potential redevelopments and reactivations.

Attention turning to projects as market deficits loom
After several years of surplus, the refined lead market is moving into deficit this year, driven mainly by shortfalls in primary, rather than secondary, raw material availability. The market moved into a statistical deficit since the final quarter of 2016, although stocks remain sufficient to cover shortfalls in the immediate future. Nevertheless, the global concentrates deficit has already started to bite, with miners able to successfully negotiate a substantial decrease in contract TCs for 2017, and Korea Zinc trimming refined lead production at its Onsan plant in South Korea after a big increase last year. With deficits looming, upward pressure on prices is expected to return later this year, and with it renewed interest in mine projects. However, the majority of lead production is as a by-product of zinc or silver, and development decisions depend more on the prices for its co-products than for lead. This said, the outlook for zinc is currently also positive.

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SOURCE CRU