Executive summary

PART 1: LEAD

INTRODUCTION

Lead has been worked since ancient times, and its anti-corrosion properties, which made it a favourite metal for use in water pipes in the Roman Empire, are still valued today. It is now used in a number of applications, but overwhelmingly in the automobile sector in the form of the starter lighting ignition (SLI) battery. For the rest of its applications, it has come under attack from Western environmental lobbyists who have driven through some stringent 'anti-lead' legislation. Yet the lead industry is far from pessimistic about its prospects and paints a bright future for the metal. Demand for lead for SLI batteries is rising along with growth in new car demand in Eastern Europe, China, the rest of the Far East and Latin America, while in the developed world the demand for replacement SLI batteries is a constant and growing feature. Over 80% of all the lead now used in the US is for the production of lead-acid batteries.

SUPPLY OUTLOOK

A forecast rise of 2.9% to 3.03 million tonnes (mt) will result in global lead mine output exceeding 3 mt for the first time in 2001. In the Western World, an increase of 2.2% to 2.27 mt is anticipated.

Further reductions in the USA will be mainly as a result of additional cutbacks at Doe Run's Missouri mines. Canadian output is also expected to be lower, principally because of the closure of Cominco's Sullivan operation. These decreases will, however, be more than balanced by further rises in Australia, China, Ireland and Mexico.

World supply of refined lead metal is forecast to increase by 0.9% to 6.64 mt in 2001. In the Western World, however, a fall of 0.2% to 5.06 mt is expected.

A rise of 1.6% in Europe will be mainly a consequence of a significant recovery in UK production after cutbacks at Britannia Refined Metals in 2000. Further increases in China and the opening of a new plant in Malaysia will be the main impetus behind a 2.6% expansion in Asia. US output is, however, forecast to fall by 3%.

Global lead mine production

Lead mined supply is set to increase on the back of new zinc projects. According to various industry sources over 80% of lead concentrate is currently estimated to come from operations that produce zinc as the primary ore, and the current expansion is zinc mining projects is likely to increase the proportion of lead produced as a by-product. The most important mine to have come onstream in recent years is BHP's 180000 tonnes per year (tpy) Cannington mine in Australia, which is primarily a lead producer. But in addition, several new zinc-producing mines, also in Australia, will also yield significant amounts of lead. These include: Pillara, which will produce 34000 tpy of contained lead; Century, which will ultimately produce 45000 tpy of contained lead; and George Fisher, which will produce 100000 tpy of contained lead.

These new projects have led to a recent upturn in lead production, which in 1995 had fallen to 2 mt, its lowest level since the early 1960s. The dramatic reduction in mine output in 1995 resulted in a concentrate deficit of 150000 tonnes. In 2000, Australian mine production increased by some 2.7% compared with 1999. Although this is substantial, it is less than had been anticipated owing to the closures at Los Frailes, Faro, Woodlawn and Caribou, along with other supply disruptions.

DEMAND OUTLOOK

Lead consumption is estimated to rise in 2001 by 1.1% worldwide to 6.57 mt and in the West by 0.2% to 5.66 mt from the previous year.

Current projections indicate that lead demand will not be affected by the present economic downturn as much as a number of other commodities. This relates to the fact that its major end-user market is replacement lead-acid batteries, a sector that is generally not as sensitive to economic fluctuations as other industries.

Demand in the USA and Europe in 2001 is forecast to be at a similar level to 2000. In Asia, a rise of 3.5% is expected, primarily through further growth in Chinese domestic demand.

Western World refined metal balance

It is likely that the level of Chinese net exports of refined lead metal to the West in 2001 will be constrained by the availability of suitable raw materials. They are therefore forecast to be 10% lower than in 2000. Shipments from the Commonwealth of Independent States (CIS) and Eastern Europe are expected to be at a similar level to 2000.

Overall, after having also taken into consideration releases from the United States Defence National Stockpile, the forecasts indicate that demand will exceed supply in the Western World in 2001, resulting in a market deficit of 59000 tonnes.

Transport demand

Over the past twenty-five years the lead industry has witnessed sweeping changes, which have had an impact on every aspect of production, consumption and international trade. SLI batteries, used in motor vehicles for motive power, and also in standby applications, today provide the core end-use for lead. From a little over 50% of Western World demand around 1985, batteries now account for around 73% of total demand. To reach this share, use in batteries has grown at an average rate of 4% per annum since 1984. Within 10 years (2010), this share looks set to rise close to 80%. The key driver for consumption growth comes from motor vehicles.

In the Western World, the vehicle fleet is growing at an annual average rate of 3%. But substantial growth is also being seen in the emerging economies. In South East Asia, for example, vehicle fleet growth per annum is in excess of 6%.

Electric vehicles (EVs)

One threat to the traditional lead-acid SLI automotive battery, though one that is unlikely to be realised in the near future, is the development of EVs or hybrid electric vehicles (HEVs). Battery producers are developing a range of batteries, such as nickel-metal hydride (NiMH) batteries, that could be used in the new generation of vehicles.

HEVs: a more realistic prospect

While the prospect of fully electric vehicles replacing internal combustion engine-driven automobiles stretches far into the horizon, the more promising development of HEVs may yet provide battery makers with the longed-for takeoff in demand for NiCd, NiMH and other rechargeable batteries. In 2000 and 2001, a number of high-profile HEVs were launched in the USA, Europe and Japan, following on from announcements made by leading automobile producers in 1999. Among the Japanese producers are Honda, Toyota and Nissan, who were the first to launch new HEV models in 1999, followed by US and European automobile producers in 2000 and 2001.

Lead threatened by rival materials

The use of lead in non-battery automotive applications is coming under increasing threat from legislators in Washington and Brussels. In Europe, moves have been made to ensure that end-of-life vehicles are no longer be a source of pollution and a waste of resources, following the adoption of a Directive on ELVs at the end of 2000.

The Directive states that producers should control the use of hazardous substances from the concept stage of new vehicles, and in particular, the use of lead, PVC, mercury, cadmium and hexavalent chromium should be phased out in vehicles put on the market after 1 January 2002, although lead in batteries is exempt.

This legislation affects the use of lead in many areas on vehicles, such as wheel weights, light bulbs, radiators, paint, fuel tanks, and stabilisers in PVC cable sheathing and trimming and tinned wires.

Lead solders demand

One of the non-battery sectors where lead use has come under increasing attack is solders for the electronics industry. The concern about the use of lead in the electronics industry stems from occupational exposure, lead waste derived from the manufacturing process and the disposal of electronics assemblies. Although the use of lead by the electronics industry appears to be minimal, the potential for lead exposure cannot be ignored.

Lead-free solder: R&D

The California-based Ames Laboratory and Sandia National Laboratories in New Mexico have developed a lead-free solder alloy consisting of tin, silver and copper. The significance of the new lead-free solder to industry was underscored in 1999 by the signing of a licensing agreement with Multicore Solders, a European-based company with a major manufacturing plant in Richardson, Texas.

THE BASEL CONVENTION: IMPLICATIONS FOR THE LEAD INDUSTRY

The Basel Convention on the 'Control of Transboundary Movements of Hazardous Wastes and Their Disposal' is an environmental agreement designed to protect countries (particularly developing) that may not have the capability and technology to manage waste properly.

For the lead industry, in the longer term, the implications of the Convention's List 'A' ban are complex and worrying:

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