Forecast suggests downtrend in lead mine output to continue notwithstanding new mines under development and planned

CHR Metals has recently released its updated forecast for the global lead market over the balance of the decade.?It is apparent that, with increasing sales of battery electric vehicles, and without the development of significant new markets for lead batteries, there appears now to be little or no requirement for an overall increase in global lead mine production for the foreseeable future.?In fact, by 2030 it is expected that primary smelter demand for lead in concentrates will be around 7%, or 250kt lower than in 2021.

CHR Metals considers the peak in lead mine production to have been in 2014 with output in 2021 around 240kt lower.?The decline in lead mine production is due not only to the advent of electric vehicles.?It also reflects the fact that, as batteries account for over 90% of lead consumption and are now universally almost fully recycled, mined output is only required for the incremental demand for lead batteries.?There are also a handful of smaller uses remaining where the lead may not be recovered and recycled for many years, such as in radiation shielding in medical and some food processing equipment, sheathing for submarine power cables and lead sheet in buildings, as well as applications where no recovery is possible.?However, taken together, these minor uses account for less than 10% of all lead consumption.?

Over the past several years additions to lead mine production from new mines have tended to be quite small and offset by depletion and closure at older mines.?What marks out the next few years is that several projects currently ramping up to capacity, or under construction and due to be commissioned this year, in 2023 and 2024, will bring to the market quite significant volumes of lead in concentrate.?The potential net increase in global mine output from 2022 to 2024 is over 400kt lead in concentrate from new mines and likely expansions.?Such a rapid increase in output would inevitably result in an unsustainable surplus of lead concentrates once inventories, that have been depleted following two years of deficits in 2020 and 2021, are fully replenished.?

Markets adapt to changing circumstances.?New projects, where significant funds have been committed and construction is well advanced, are very unlikely candidates for the cutbacks that will be required to return the lead concentrate market to balance.?However, planned expansions can be delayed and some mines with marginal economics could close.?For lead, however, so often a by-product of zinc or silver production, profitability may depend on the prices for these co-product metals.?Surpluses of any commodity should mean lower prices, but the lead market is further complicated by the prominence of its recycling/secondary sector, which has its own price dynamics, and accounts for around 75% of total refined lead supply. ??The key role of China as the destination for 40% of lead concentrates produced outside China, is a further complicating factor.

Are there potential new markets for lead batteries which might require an overall increase in lead mine production, even as growth slows in the volume of lead required for auto batteries??Significant research effort is going into improving the performance of lead batteries and to demonstrate their ability to be a competitive part of the new infrastructure required to store energy.?Another field which offers considerable scope for an early increase in demand is to power e-bikes and e-rickshaws across Asia.?Lead batteries are still the dominant power source for e-bikes and e-trikes in China, but this is now a mature market.?In many Asian cities motor scooters are responsible for much air and noise pollution.?To improve the environment and meet climate change targets there is a move to encourage a switch to battery powered two and three-wheelers.?This is a prime market for growth in the use of lead in batteries and could be key to sustaining future demand for mined lead.

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