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New zinc projects in Europe to boost zinc mine production

Russia’s growing economy is leading to ambitious developments in the country, which are driving up demand for steel and consequently zinc, according to a new report by natural resources experts GBI Research. The new report shows that the European region held a modest 2.4% share of global zinc reserves as of the end of 2010, and European zinc mine production stood at an estimated 914.9 thousand metric tons (Mt) during the following year. Ireland, with a share of 38.4% in 2011, was the major contributor, while Russia, Sweden and Poland contributed 29.9%, 21.2% and 10.6% respectively.

European zinc metal consumption stood at an estimated 360.7 Mt in 2011, and Russia accounted for over 70% of this. The metal is used to provide a corrosion-resistant plating of steel, in a process known as hot-dip galvanising, and a strong global demand for steel from the Russian construction and infrastructure industries is increasing the demand for zinc.

Russia and Iran have formed an agreement covering the development of the world’s largest zinc deposit at the Mehdiabad zinc and lead deposit in the Iranian province of Yazd, and this is playing an important role in the present-day European zinc mining industry. The total ore reserves at the Mehdiabad deposit are estimated to be around 394 million metric tons (MMt), with an average zinc grade of 4.2%. The project will be managed and operated by Russia’s Rostekhnologii Corporation and Iranian Bank Saderat Iran, with an estimated investment of around $1.2 billion.

Other planned zinc projects in Europe include the Pallas Green Project in Ireland, estimated to hold 1,945.1 MMt of reserves, and the Ozernoe zinc project located in the Russian province of Buryatia, containing 157 MMt of zinc ore. Further exploration potential is evident in Poland, as the area surrounding Krakow is believed to possess huge unexploited resources with high-grade zinc content.

However, rising electricity prices across Europe, due to the new EU legislation on carbon dioxide emissions expected to be implemented from 2013, are expected to cause problems. As countries are being allocated fewer and fewer emission rights, the purchase price of emission rights will increase, cumulatively leading to higher electricity costs.

Europe’s zinc ore production was around 914.9 MMt in 2011, and is expected to increase at a CAGR of 3.2% during the forecast period to reach approximately 1,201.5 MMt in 2020.

Source: GBI Research, New York

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