Xstrata: Zinc, Lead Mine Closures Seen As Reserves Age

LONDON, Dec. 8 -- Zinc and lead mines globally will close in the next five years due to aging resources, so miners need to ramp up new projects to prevent a shortfall in supply, said Santiago Zaldumbide, chief executive Xstrata Zinc, Tuesday.

Xstrata estimates 1.9 million metric tons of zinc mine capacity and 0.5 million tons of lead capacity will close globally by 2016. It forecasts 800,000 tons worth of new zinc projects and 150,000 tons of new lead projects will appear by 2016.

It forecasts a supply gap of seven million tons in 2020.

"With expected mine closures, the zinc industry will need to develop about seven million tons of new mine capacity by 2020 and about 14 million tons by 2025 in order to meet expected demand," Zaldumbide said at an investor day in London.

Xstrata plans to double McArthur River Mine production capacity to five million tons a year and close Brunswick zinc mine in Canada by March 2013.

The miner is targeting 25% growth in zinc mine production by 2017 and 34% growth in refined zinc output.

"We think zinc fundamentals are just as good as copper long term," Zaldumbide said.