Document 9rY6OzVQJGNOGnDX2aBYaKEe

RESOURCES FOR THE- FUTURE, INC nJ:. N36941 / DUP050313972 Lead and Zinc The usual difficulties in the quantitative and qualitative assessment of the reserves and resources of a metal are intensified for lead and zinc because of the nature of their occurrence. Although deposits do occur in which zinc is unaccompanied by lead, or vice versa, the usual occur rence of these metals is in deposits of lead and zinc minerals in associa tion. In addition, lead and zinc occur with a wide variety of accessory metals and minerals, such as copper, gold, silver, antimony, bismuth, cadmium, and pyrite (valuable for its sulfur in some parts of the world). Indeed, lead and zinc are so frequently co-products or by-products that the term "grade" in lead-zinc mining is often expressed as the value of the combined content of all metals rather than as the content of lead or zinc alone. The significance 'of the lead or zinc content by itself is thus drastically reduced; and by the same token, it is not possible to delimit reserves from potential ore on the basis of such content except at the most general level. Deposits in which lead and zinc are the predominant metals are fre quently small and highly irregular in shape. They must be mined by a variety of underground methods, many of which are not suitable for use on the scale of mining commonly used for the metals discussed pre viously. This does not mean that unit costs in lead-zinc mining are neces sarily high (the metals are, if anything, remarkable for their relative cheapness); it does mean, however, mines of smaller capacity, on the average, than those producing iron, manganese, aluminum, and copper. These same physical characteristics of the lead-zinc deposits also tend to require higher capital outlays per unit in the development of re serves; the life index of lead and zinc reserves is therefore small com pared with those of the preceding metals, and the usefulness of the re serve data for present purposes is thereby much reduced. Because of the common association of the two metals the following dis cussion differs in organization from the preceding sections. The reserveresource position and supply versus demand comparisons are examined separately for each; the cost implications are considered jointly. < 52 i li n 8 P w B PC th pr de thi Til ore mi, pre pot pot cm furt Doi It and distr knov >TJ ton; accou cussic In otl1 of lea *TI (Was* j DUP050313973 itative assessment of ;d for lead and zinc ;h deposits do occur rsa, the usual occurminerals in associavariety of accessory antimony, bismuth, parts of the world). or by-products that pressed as the value s the content of lead nc content by itself n, it is not possible : such content except Leant metals are fremust be mined by a j not suitable for use tetals discussed preinc mining are necesfie for their relative Her capacity, on the iminum, and copper, tc deposits also tend development of retherefore small cornusefulness of the re.iced. tals the following dissetions. The reservearisons are examined idered jointly. 4 1............ "" \ ` ........ ............................................... .................. fi--' .................................... ' j j j i I j : f j ], I j j' j i j j Lead and Zinc 53 LEAD Domestic Reserve-Resource Position The current official estimate of United States lead reserves is 2.9 mil lion short tons in the measured and indicated categories plus about 2.7 million tons inferred, or 5.6 million tons, total. Of this, between 70 and 80 per cent is considered recoverable with current technology at present prices.1 Although lead is produced as a co-product or by-product from ore with less than 1 per cent lead content, the U.S. Geological Survey and Bureau of Mines in their report to the PMPC noted that identified potential lead ore may carry as much as 7 per cent lead. This illustrates the fact, referred to above, that the value of the other metals and minerals present is more important than the percentage of lead alone as a cost determinant. Material in one deposit with a lead content seven times that in another may nevertheless be uneconomic, for a variety of reasons, The agencies estimated that the total lead content of identified potential ore was no greater than the reserve figure at that time, or some 8 million tons.2 The contrast between these figures and the estimates for the metals previously considered is startling. For each of the other mejals, identified potential ore is at least several times the reserve level; for lead, identified potential ore is not much more than reserves. This anomaly, which is of crucial significance iii assessing the future supply position, is considered further below. j Domestic Supply Versus Demand f In the comparison of projected requirements with identified reserves | and resources in Figure 9 it is apparent that discoveries of many new i districts, not merely extensions of measured and indicated reserves in | known districts, would be required if annual domestic mine production j 1 IJ.S. Bureau of Mines, Mineral Facts and Problems, I960 edition (Washing- |. ton: U.S. Government Printing Office, I960), p. 436. This recovery takes into * account all Josses from mining through production of refined metal. The dis- j mission of copper recovery above, it should be noted, refers to milling losses only. { In other stages of production, losses of copper are negligible compared with losses ' of lead and zinc. *The President's Materials Policy Commission (PMPC), Resources for Freedom | (Washington: U.S. Government Printing Office, 1952), Vol. II, p. 151. i j DUP050313974 54 THE FUTURE SUPPLY OF THE MAJOR METALS were to do no more than hold the average Of the past five years (roughly 300,000 tons) during the remainder of the century. Domestic self-, sufficiency in the future would appear to be beyond any conceivable pos sibility. In the period 1954-59 domestic mine output amounted to a little over one-quarter of primary lead consumption, on the average, compared with one-third in the period 1949-53, despite an absolute decline in consumption. Mine production in 1960 of 239,000 tons was roughly one-third that of the peak production years in the 1920's, when output approached 700,000 tons; even with governmental stimuli the production peak during World War II was less than 500,000 tons and during the Korean War less than 400,000 tons. In our opinion, this constitutes abundant evidence that resource depletion is the dominant reason for the industry's decline.8 Such evidence led S. G. Lasky, as well as the PMPC, to conclude that primary lead production in tire United States would probably con tinue to decline in the future.34 *L6arge improvement in recovery, while helpful, would not change the situation fundamentally. There is no reason to disagree with this conclusion, barring a drastic improvement in the ability to discover new lead districts. The maintenance of an average annual output of 300,000 tons over the period 1960-2000 would mean cumulative production of 12 million tons and the necessity of find ing, at the very least, additional reserves equal to twice current re serves, or roughly the equivalent of total currently identified resources. Even an annual level of 100,000 tons would require the discovery of more reserves than are currently identified, but this could be accom plished if the rate of additions to reserves in the 12 years, 1944-56, were to be maintained. 3 This allows for the recurrent strikes that have plagued the industry in recent years and contributed to a low level of output. The fact that many mines have closed because of price competition from foreign sources is not evidence against resource depletion but on the contrary further supports the argument. In former years the U.S. industry provided the price competition which foreign sources had to meet. 4 PMPC, op. cit., Vol. II, p. 41.; S. G. Lasky, "Mineral Industry Futures Can Be Predicted--II," Engineering and Mining Journal, September 1955, pp. 94-96. 6 Estimated reserves as of 1944 were 7.75 million tons (U.S. Bureau of Mines and U.S. Geological Survey, Mineral Resources of the United States, Washington, Public Affairs Press, 1948, p. 126). Production from 1945 through 1956 totaled 4.5 million tons, with 5.6 million tons of reserves estimated at the end of the period. Gross additions to reserves thus totaled 2.35 million tons in the 12-year period. At this rate, reserve additions in the next 40 years would total 7.5 million tons. Lead at, |i 20 FIGURE the contai Recent condusio other unr first magi details of lead supp additions the new < decline in store ann cove ties i discovery can be cc ability rei might fort Foreign , Foreign are given I DU P050313975 TOR METALS ars (roughly jmestic selfceivable posloanted to a the average, an absolute i)00 tons was 1920's, when il stimuli the 000 tons and opinion, this tiie dominant to conclude probably conjcovery, while There is no ; improvement tenance of an 50-2000 would scessity of find.ce current re ified resources, le discovery of ld be accom1944-56, were industry in recent many mines have t evidence against ument In former ireign sources had ustry Futures Can 1955, pp. 94-96. . Bureau of Mines hates, Washington, ough 1956 totaled at the end of the ons in the 12-year s would total 7.5 Lead and Zinc 55 FIGURE 9. U.S. primary lead requirements, 1960-2000, compared with the contained lead in domestic reserves and domestic identified resources Recent developments in Missouri may require modification of these conclusions. The Viburnum deposit, discovered in 1956, and subsequent other unrelated discoveries in the same area are rumored to be of the first magnitude. In view of the unfortunate secrecy surrounding the details of these discoveries their significance for future domestic primary lead supply cannot be assessed pubEcly. At worst, some of the needed additions to reserves referred to above have already been made. At best, the new discoveries may be sufficiently large to more than offset tbe decline in productive capacity 'elsewhere in the United States and re store annual mine output to 300,000 tons or more. What these dis coveries indicate is that there are more sizable lead deposits awaiting discovery in this country. It remains to be seen whether these discoveries can be considered evidence of the drastic improvement in discovery ability referred to in the preceding paragraph as the only factor that might forestall declining production. Foreign Reserve-Resource Position Foreign lead reserves in the measured and indicated categories only are given in Table 8 and total 45.9 million short tons. The figure for l i DUP050313976 56 THE FUTURE SUPPLY OF THE MAJOR METALS Asia is stated in the source to include Burma, China, India, Iran, and Japan, but elsewhere, the lead reserves of China alone have been re ported to be from 3 to 6 million tons.8 The Asian figure and the foreign total are both certainly minimal. The Bureau of Mines states that "the reserve of inferred ore is probably as much or more,"T but in the absence of any data this is merely t a b l e 8. Le a d : Fo r e ig n Re s e r v e s , Me a s u r e d a n d In d ic a t e d , 1957 North America Canada____ Mexico........ Thousand short tons metal content 11.700 ,ooo 3.500 South America 2.500 . Europe:........... *. West....... East........ 13.700 9,100 4,600 Africa........................................ 3,500 Asia............................... 2,000 AustraEa................. Total......................................... _1_2_,5_0_0 45,300 Source: U. S. Bureau of Mines, Minerals Yearbook, 7957 (Washington.; U, S. Govern ment Printing Office, 1958), Vol. I, p. 725. <f ! a more or less informed guess. A somewhat more specific guess was made previously in 1955 by a Bureau of Mines specialist who suggested on the basis of the partial information at hand that the total reserves of the world in all three categories might be something like 100-150 ' K. P. Wang, Rich Mineral Resources Spur Communist China's Bid for In dustrial Power (Special Supplement No. 59, Mineral Trade Notes) (U.S. Bureau of Mines, March 1960), p. 30. 1 U.S. Bureau of Mines, Minerals Yearbook, 1957 (Washington: U.S. Govern ment Printing Office, 1958), Vol. I, p. 72S. .; < l Lead and Zin million tons ol three times as i because of the speculation cor fruitless in the to be unanimoi potential ore ar World Supply In Figure 10 tons, the approx becomes increas recognition of t and the increasi the speculation < Quantity C at between 1960 a: same that prevai tons represents . and 1960. Quat continuation of t The rate of g been declining ar. In this country pi gone an absolute and to substitute 25 per cent over of file decade. T demand pattern f through the rema Quantity C in Fig Even if there w that large discovci s O. M. Bishop, "1 presented at meeting tion, Chicago, April * PMPC, op. cit., ' DUP050313977 i 1 >F THE MAJOR METALS China, India, Iran, and na alone have been re in figure and the foreign ;rve of inferred ore is if any data this is merely a n d In d ic a t ed , 1957 i short tens content ,700 ,000 ,500 ,500 ,700 ,100 ,600 ,500 ,000 ,500 ,900 (Washington: U, S. Govern- more specific guess was specialist who suggested I that the total reserves something like 100-150 munist China's Bid for InTrade Notes) (U.S. Bureau [Washington: U.S. Govem- Lead and Zinc 57 million tons of lead.8 Inferred reserves, in other words, may be two to three times as much as the other two categories combined. In any event, because of the general lack of data in the inferred category, further speculation concerning the size of potential ore resources was considered fruitless in the report of the PMPC.8 Opinion on this point would seem to be unanimous, for as far as we know there are no world estimates of potential ore anywhere. World Supply Versus Demand j In Figure 10 the line for estimated reserves is solid through 50 million tons, the approximate total of the measured and indicated categories, and 1 becomes increasingly broken beyond this to the 150 million-ton point, in recognition of the highly probable existence of some inferred reserves and the increasingly hypothetical nature of larger tonnages included in the speculation of up to 150 million tons total reserves. Quantity C at 176 million tons represents cumulative world demand between 1960 and 2000 at an average growth rate of 2.7 per cent, the same that prevailed between 1950 and 1960. Quantity B at 139 million tons represents a rate of 1.6 per cent, .which prevailed between 1955 and 1960. Quantity A, at approximately 100 million tons, represents a continuation of the 1960 consumption level through 2000. < ' The rate of growth in world primary lead consumption has clearly been declining and again the United States appears to be leading the way. In this country primary lead consumption over the past decade has under gone an absolute decline, due both to an increase in secondary supply and to substitution away from lead. This decline amounted to almost 25 per cent over the decade as a whole and 17 per cent in the last half of the decade. Thus it is likely, barring unforeseen developments in the demand pattern for primary lead, that the growth rate in world demand through the remainder of the century will be closer to Quantity B than Quantity C in Figure 10. Even if there were no growth in demand at all, however, it is apparent that large discoveries of lead are needed. Figure 10 shows the total lead B O. M. Bishop, `The Reserve Base for the World's Lead-Zinc Industries," paper presented at meeting of the American Zinc Institute and Lead Industries Associa tion, Chicago, April 28, 1955. s PMPC, op. cit., Vo!. H, p. 151. ( l DUP05031397B 58 THE FUTURE SUPPLY OF THE MAJOR METALS - Estimated Measured and indicated f reserve* Wend i Ai 1* 1 cf Projected 40-yeer ca nt u l at ive demand i-_-_-_--_-_--_--_-_-_-_.-_-_-_-_--_-_-_--_-_-_- t._--_----------- -------------J------------- 1-------i----- .--------------4-------------- 0 25 SO TS lOO 125 ISO 175 200 Million short tom of lead f ig u r e 10. Adequacy and cost implications of projected world demand for lead contained in ore; allowing for 80 per cent recovery, measured and indi cated reserves of recoverable lead are only 40 million tons, and the equivalent ore requirement for each possible cumulative demand is 20 per cent greater. Given the undoubted understatement in the measured and indicated reserve data and the "discoveries" that will be made from the inferred category, considerable additions can be made to reserves. The outlook concerning true discovery of new ore bodies and districts, however, is less sanguine. The report of the PMPC, after a survey of the general occurrence of lead and the postwar discovery record, concluded that "the outlook for the discovery of substantial new reserves . . . [was! not encouraging."14 Whether or not this judgment is correct, until there is clear evidence to the contrary the adequacy of future additions to reserves as presently defined remains questionable. This directs one's attention to the resource situation and the level of identified potential ore, so as to get some idea of possible cost effects in the event of inadequate discoveries of additional reserves (defined ac cording to present criteria, it should be remembered). But Figure 10 contains no representation of resources, for there is nothing to repre sent. The only figure available, the 8-million-ton estimate of United States potential ore, is too small to warrant separate identification. Yet tire potential ore figure for the United States raises a question of great interest. If the small ratio of potential ore to reserves represents the true concentration distribution of lead in nature, then the potential ore available in the world as a whole is also comparatively small in 10 PMPC, op. cit.. Vol. n, p. 43. i j Lead and quantity. . report of f) ! rise In the It was ol ! tial ore an< stances, lea , the attentic reflect natu lead mining and quantii presentatioi logical Sun does not pc serious qua This point j Domestic 1 In 1957, t reserves of zi in ore. As i recoverable.1 sum of meas position, as c was the resui sidered distrit It does not i potentialities undoubtedly i to assume th; 11 See footnot 12 U.S. Bure:i ton: U.S. Govei 13 VS. Bures ment Printing C DUP050313979 "* \ - \ i< ! , i. "lU a \ U- j r' in*.,,! Jh ri ~A th in i ' "tir l:, I "rfn. Lead and Zinc 59 quantity. And if the unoptimistic discovery outlook indicated in the report of the PMPC is also correct, the world might experience a sharp rise in the price of lead even before the end of this century. It was observed above that in the case of lead the ratio between poten tial ore and reserves is unusually small. If this reflects natural circum stances, lead is an anomaly in this respect which should have provoked the attention of the geological profession before now. If it does not reflect natural circumstances it must be that, for reasons peculiar to the lead mining industry, little attention has been given to the identification and quantitative estimation of occurrences of potential lead ore. The presentation of the B-million-ton potential ore figure by the U.S. Geo logical Survey in the PMPC report is of no help in this respect, for it does not point out either an anomalous potential ore-reserve ratio or a serious quantitative underestimation of what actually exists in nature. This point, is discussed further below. ZINC Domestic Reserve-Resource Position In 1957, the U.S. Bureau of Mines estimated measured and indicated reserves of zinc in the United States to be 13,485,000 short tons of metal in ore. As is true for lead, between 70 and 80 per cent is currently recoverable.11 Inferred reserves "are judged to be at least equal to the sum of measured and indicated reserves."12 A summary of the reserve position, as of 1950, showed 12.7 million tons of inferred reserves. This was the result of a reappraisal of postwar data on half of the "66 con sidered districts that are believed to contain the major domestic reserves." Ic does not include, however, inferred reserves "in areas whose zinc potentialities have not yet been realized, hence it is a minimum that will undoubtedly be augmented to an unknown extent."13 It seems reasonable to assume that actual additional inferred reserves are still at least 12 " See footnote 1, p. 53. " U.S. Burean of Mines, Mineral Fads and Problems, 1960 edition (Washing ton: U.S. Government Printing Office, 1960), p. 985. 13 U.S. Burean of Mines, Materials Survey: Zinc (Washington: U.S. Govern ment Printing Office, 1951), p. III-9. i C._. DUP050313980 64 THE FUTURE SUPPLY OF THE MAJOR METALS head ai certainty. (Potential ore is not represented in Figure 12.) Here the situation is similar to that in lead: there is the same unusually small ratio between reserves and identified potential ore in the United States and the same question as to whether this reflects natural circumstances or a lack of attention to potential ore. THE LEAD-ZINC ANOMALY The question of resource adequacy in lead and zinc (in the sense of an upward pressure on real costs because of the small magnitude of re sources) is academic for the present and short-term future, but it is nevertheless a nagging one.22 Why is there such a marked absence of in formation on the potential ores of lead and zinc? There are only two pos sible explanations: (1) there is relatively little material below present cutoff grades; (2) such material exists, but for some reason there are no data. In either instance the situation with respect to lead and zinc is an anomaly compared to that for the other metals discussed here. ' There is evidence in support of both explanations. The lack of data may merely stem from differences between the geology of lead-zinc occur rence and that of the other metals. Since the lead-zinc deposits may be characterized by sharper boundaries, there is little point in pursuing exploration efforts beyond cutoff grade. In many iron and aluminum deposits, on the other hand, similar effort may indicate large tonnages of potential ore because of the lateral continuity of the deposits and the indefiniteness of the deposit boundaries. Moreover, if there is an anomaly in the grade distribution of lead and zinc it would have been noted by the geological and mining professions, yet there is a notable absence of comment on such a circumstance. Another reason for lack of data could be the prevalence of old districts as the sources of lead and zinc, at least in the United States, in which the continued development of existing mines does not require the delineation of ore and potential ore to the same extent as in new districts. For new districts more information may have to be acquired and made public in order to raise the capital for initial development. The problem of assessing co-products and by-products may also con tribute to the lack of data. Finally, it can be argued, again for the United I explorat Yet ti relative! by Lask others, i centratk increasir lead anc there is i is an ini] Perha World V United 5 what wo The govt but the r for curre duction ' tion to ti It cou grade is of poteni subsidy p of potent that coul was direi during M potential evitably potential ship chat: If this why has i ] tion. The this adds course of 30 See, for example, C. O. Swanson, "'World Reserves of Lead and Zinc," The Canadian Mining and Metallurgical Bulletin, May 1960, pp. 346-49. * DU P050313981 or THE MAJOR METALS in Figure 12.) Here the the same unusually small 1 ore in the United States cets natural circumstances MALY and zinc (in the sense of the small magnitude of rewrt-tcrni future, but it is :h a marked absence of inc? There are only two postlc material below present for some reason there are It respect to lead and zinc metals discussed here, nations. The lack of data geology of lead-zinc occur- iead-zinc deposits may be is little point in pursuing many iron and aluminum tay indicate large tonnages lity of the deposits and the Moreover, if there is an id zinc it would have been ons, yet there is a notable be the prevalence of old iast in the United States, in tg mines does not require the same extent as in new i may have to be acquired tal for initial development, by-products may also coni be argued, again for the 'crves of Lead and Zinc," The 1960, pp. 346.49. Lead and Zinc 65 United States, at least, that depressed lead-zinc prices have discouraged exploration for additional reserves of these metals. Yet there are disturbing arguments and evidence for the existence of relatively little potential ore. The tonnage-grade relationship developed by Lasfcy for copper has been extended to additional metals by him and others, showing a fairly continuous occurrence across a range of con centration from well above to well below cutoff grade, with tonnage increasing as grade declines. There is no a priori ground for believing lead and zinc to be exceptions to this relationship; on the other hand, there is nothing in the realm of geology to indicate that such an exception is an impossibility. Perhaps the strongest evidence is provided by the attempts during World War II and the Korean War to stimulate lead-zinc output in the United States. The government offer to subsidize the exploitation of what would normally be potential ore received a disappointing response. The government approved a high percentage of the proposals it received, but the resulting increase in production was only modest and insufficient for current needs (including stockpiling). The limited increase in pro duction was all the more surprising since the subsidy was large in rela tion to the current market price. It could be argued that the distribution of lead-zinc occurrence by grade is such that subsidies must be very high to bring large quantities of potential ore under consideration. But if this were so, the wartime subsidy programs should have yielded knowledge of a very large tonnage of potential ore as a by-product of the industry's efforts to find material that could be worked under the subsidy. Indeed, the exploration effort was directly subsidized and even carried on by the government itself during World War II. The fact that despite this effort the ratio of potential ore to reserves is still low for both lead and zinc leads in evitably to the suspicion that there is, in fact, comparatively little potential ore; or, what is the same tiling, that the tonnage-grade relation ship changes fairly abruptly not far below current cutoff grades. If this is the anomaly that exists, and not merely a lack of data, then why has it not received attention heretofore? We can offer no explana tion. The situation thus remains puzzling, and because of the uncertainty this adds to the long-run outlook for lead and zinc we hope that the course of events will clarify it sooner rather than later. DUP050313982