China’s growing zinc exports create marketing ramifications

The large volume of zinc exported by China in 1993-94 contributed to an intense depression in world prices for the metal, according to CRU International.

Exports were also high in early 1995, but they have since fallen sharply, and the surge in exports appears to be over at present.

Nevertheless, a new study by CRU, entitled China’s Zinc Industry, suggests exports could rise to more than 300,000 tonnes per year in the next five years if enough concentrate can be imported to meet growing smelter demand.

China is rich in zinc resources and has developed them rapidly over the past decade. As a result, the zinc-mining sector is larger than other Chinese base metal industries, accounting for 13% of total world output, compared, for instance, with only 5% for copper. This growth is also reflected in the fact that China produced 200,000 tonnes per year 15 years ago, whereas today it produces almost 1 million tonnes.

The growth has been achieved regardless of the fact that China has no large-scale zinc mines. The largest, Fankou, produces 100,000 tonnes per year. In 1994, two-thirds of China’s zinc output came from mines producing fewer than 10,000 tonnes annually, compared with less than 5% in the West.

While the scale of operations is small, Chinese mine reserve grades are generally closer to Western operations than the low-grade mines that operate in the former eastern bloc countries.

State ownership of zinc mines has declined to 40% of mine production, compared with 60% a decade ago. Local governments and small local miners are taking a more active role in developing small-scale mines.