Document LK31NjD5DyNme2MogLLEXoRo3

9* I 0 r"iiniiiiwUriii iirt rin iinmaiifiilrim LI A15 908 na w o r l d l e a p amp z in c somr AW) IT? lrr ATIOH TO DEMAND BT BICHABD A. TOONC Chairman of tbo Board Anarlean Zinc g Load and SmUIb i Coaptay Proaontod at! JOINT SESSION IBAB INDUSTRIES ASSOCIATION A AMZZZCAN ZDC IBSTZTVTK a n n u a l me e t in g CHICAGO, ILLINOIS April 29, 1969 iB^jPippjiqfpp^ |l IM|jl'8nppy>iW'PW,itwwwr<ajU0M>fri $ i uuiuri ww<iwu> - m MMialawueKsaBHifisgaiijUi L IA159C9 iaaiiwhaii mr .i. iiMfiinViMnint- ii bs .ij m.wi' wmipappmiww >UJUM !!inwp P M P P M r,'iP nme wesuimmsssi saw o FREE WORLD LEAD AND ZINC SUPPLY AND ITS BFtATTOM TQ PQWtP It la no secret that laad and fine hava baan and are In extremely abort supply. Also, It la no aacrat that the shortsge la due to Inadequate mina production of both aetala to naat the fraa world demand. in fact, both matala ara In such ahort supply that in 19M the United States Government, by act of Congress, re1assad 50,000 tone of laad and 75,000 tons of sine from the national stockpile. Again this year legislation has been enacted authorising the Government to release an additional 200,000 tons of each metal. Having heard the past, present and future consultion discussion by Mr. Volff, I will try to cover the sane geographic areas for y<xi from a supply standpoint and, for sake of convenience, on my charte Z will carry along Mr. Wolffs consumption figures so that you will see the relation between the two. By viewing these, 1 hope I will be able to give you the answers to (a) why did it happen? (b) la there going to be enough to go around this year? and (c) what Is the longer term outlook for supplydemand balance? First, let m explain to you the basic assumption on which my forecasts of supply are based. I have no crystal ball and I make no pretense at trying to guess what ups and downs m*g*e be in the economy of the free world or any segment thereof in a given year. Whatever occurs la this regard can vastly affect either the supply situation or the level of consumption, or both. However, since our question today Is whether or not there will be ' I. u melimewwMmspBmempeMMSnsmMWMmms^gP SPPWMMWIIJ U IPJUI! M" wrnmrmmmm**!** *r u mm* rnminmmm ' '( LIA15910 0 -2 enough to support a continuing strong economy, that la Just vfaat Z hava assumed. Under conditions of a weakening economy, supply always exceeds demand so that possibility has been dismissed for purposes of this presentation. While lead and sine are similar in general, they are quite different In detail and, thus, 1 will cover them separately, starting with lead. kliS Chart #1 shows the free world consumption of lead from 1950 through 1964 and as projected through 1968, from Mr. Wolff's previous paper. Shown In relation to the consumption, are free world smelter production from 1956 through 1964 and projected through 1968, and recoverable nine production for the same period. The lower lines on the chart show the same figures for the United States only from 1958 through 1964 on an actual basis and projected through 1968. Before analysing the showings of the chart, let me explain to you the definitions used In the statistics making up the data used. The definition of lead smelter production la the same as that adopted by the United Rations Study Croup for Lead and Zinc, namely, that they include only lead produced la pig lead and antlmonlal lead produced from smelters and refineries ragardlam of raw material source, but do not include secondary lead resulting mm .......... hi iSittnin'SS rnmmmmmmmmmt J1A1 Kilifiii . .^ L^1591l RllWUfp ' p w w ii M " ' lewe -.m e pu eeae iw wi .i ,ii h . ii > 'i p p ip iw |ip ip p i i p ! e ^ SW*eww,UuwwmywBw>m imwmme'H w *a PH' . |Uw, nwe m w -3 fron reaelted scrap but not smelted. Sine* statistics have beam nad up by the United Ration* Lead-Zinc Study Croup on thia baala only a Inca 1958, figures properly compiled are not available prior to that date. Prior to 1958, the free world and U.8.A. nine production of lead had run a very parallel courea with that of sine, for which figures are available, and which will be covered later in this presentation. In 1958, lead was in gross over-production in the free world relative to consuag>tlon, the excess of natal production over consumption being aone 290,000 tone. By the end of that year, producer stocks had grown substantially and prices had dropped considerably froa their 1957 high. Free world consumption bed fallen from its 1956 high by some 245,000 tons and nine closures were quite widespread throughout the world. While as pointed out by Mr. Wolff, from 1958 until 1964 the free world consumption of lead increased some 700,000 tons, you will notice from the chart that free world mine production underwent no net increase whatsoever, being relatively flat at about the 2 million ton level for the 6-ysar period. You will note also that while mine production of lead was not increasing, smelter production was. In fact, it increased every year from 1958 through 1964 for an aggregate total of 529,000 tons. How this was caused by thraa things: (a) drawdown of or* stocks at ie" ISJfflWW' *EW msmipjp u ij imsl ii,j j piisisijigjii,!is( ------------ L IA 15912 *4 smelters and nines, (b) nors scrap coming on tbs market bscsuss of iocTtmami pries*, sad (c) s psrasnsnt inertsss In ths battery sersp run-around In several countries where the eutoaoblle population has Increased Markedly during the period. Unfortunately, statistics on a world-wide basis are not available which will allow a breakdown of these three factors. It la thought, however, that drawdown of ore stocks had run Its Halt by the end of 1964 and that 1965 and thereafter will see a smaller differential between nine and saelter production than the record 825,000 tone of 1964. w*y you look at It, the conclusion In lead la that the shortage existing today Is due to lack of Increased nine production commensurate with the very substantial Increase that has taken place in contraction. While 1 will examine the.exact situation In 1964 and 1965 In sons detail later, let us now consider what Is likely to happen to lead nine production between now and 1968. Here wo find the situation will change radically. Last November, at the regular nesting of the United Hattons Lead-Zinc Study Croup in Madrid, a special subcommittee was appointed to investigate the probable increases In nine production in the next few years. I was aade chairman of that subcoessittee. Through Information gained In that experience, plus additional information gathered from all available sources since that time. It would seem likely that lead mine p_i s^,l*u.7m. , if*' *- - - . - 7' MSMi -3- production in 1963 will rise approximately 223,000 ton* over 1904, 1966 will see a further 180,000 ton Increase, 196? a further 120.000 tone, and 1968 an additional 220,000 tone, for a total hwraa** la tba next four year* of tone 750,000 tone. Thle total ie nada ty> of approximately 150,000 tone la EuruP*. 500,000 tone la the 0.8.4., 15,000 tone la Japea, 100,000 tone In Canada, and 180,000 tone la the balance of the free world. The 180,000 too free world figure la over and above their 1964 production; however, certain Interruptlone ceuaed 1964 production to be lei* than 1963 output, ao that only 125,000 tone of the 180.000 figure represent* true additional production capacity. The Airopean lncraaaa In 1965 ateae principally fron a 30.000 too Increase In Yugoslavia, a 15,000 ton Increase la freace caused by the starting of tha Largentlcre Mine, 10,000 tone fron the Tynagh Mine In Ireland beginning production la 1965, sad an Increase in the San Marco Mine la Italy. In 1966, Europe will Increase a further 40,000 tons, being entirely fron the coning up to capacity of the Tynagh Mine. In 1967, a further 22,000 ton Increase will scan fron the startup of Silvernlnea property la Ireland and In 1968 a 30,000 ton increase fron new nines starting up la Sardinia. In tha U.S.A. an Increase of 30,000 tons Is expected la 1965 &ie to increases la the Viburnum nines of St. Jo* over the JJ i iM -JI " wnwi y w fMfrl LIA159J4 ialiaaa^^ -i- 1964 level, a 33,000 con Increase in 1966 froa further 8t. Jo and L Bunker Hill Southeast Missouri production, plua niacallanaoua small a further Increase in 1967 of 47,000 tone, and a 200,000 ton increase In 1968 froa the bringing la of the Asux-Hoaestaka mines, the Comlnco-Dresser nines, one of the Kennecott nines and the AS&R mine, all in Southeast Missouri. Xn Japan, 3,000 ton increasea are expected each in 1963, 1966 and 1967, with expansion of existing nines plua recovery of lead froa the socalled black ores. Xn Canada, 30,000 ton Increases are expected In 1963 and again in 1966, caused bp Increases in the Brunswick Mine plua j bringing in of the Fine Point Mine of Coalnco. Xn the balance of the free world, in 1965 a 20,000 ton i Increase is expected in Africa and a 10,000 ton increase In Australia froa Mt. Xsa. In 1966 reasonable Increasea are expected in Peru and India, with an additional 35,000 tons In Australia also froa Mt. Isa. In 1967 a further Increase is expected froa Peru and a further increase froa Mt. Xsa. This boost of soae 750,000 tone, or 381, la world production In the coning four years will have soaa rather drastic effects upon the flow of lead as between various trade areas, which X will dwell on in sons detail later. Assuming that the differential between nine and smelter production In lead In the free world returns to about a normal ymm -.aM iii.BiiKnftmiae, i 7 700.000 Con level, on the chart I hava projactad what this would naan In aaaltar production over tha next four yeara. You will note that ou a free world baala, anelter production and consumption cross In 1966 and in 1967 and particularly In 1968 a surplus of sons 200.000 tons appears possible. X would Ilka to point out, however, that this surplus Is of tha order of only 5t to 6t and an additional Increase of 11 par year in consumption over that estimated could aka this a relatively balanced situation. Xt appears most likely, however, that by 1968 we are going to see a balanced or slightly surplus situation In lead In the free world. Looking now to the O.S.A. alone, you will note that the 300,000 ton Increase between 1964 and 1968 in nine production, most of which cakes place In 1968, causes the O.S.A. smelter production to Just atxxic equal U.S.A. consumption. The full importance of this X will discuss later. Turning now to the lnsedlate situation la lead. Chart #2 shows the mine production, metal supply and consumption for tha years 1964 and 1965, estimated by half-year periods, for O.S.A. and tha balance of the free world. Supply In O.S.A. la smelter production plus stockpile releases, and supply In the balance of the free world Is smelter production plus net la^orts from Eastern Europe. 1 think the following observations are of Interest. In the first half of 1964, the balance of the free world espamsenepaiCMpcRwe mr rnmrnmm. 7K wmmrnmm^ - i----- -> & Suit LIA15916 - . - - --. n isat^lnrewtlBsiMSBiii Bjafriria'iMrnVVMt^1 Y i \ ------ 8 had smelter production plu lnporta from Eastern Europe representing a metal supply of approximately 95,000 tona in excess of their needs. 0.3.A. had a natal requirement of consumption over analtar production amounting to approximately 100,000 tona and 0.8.A. Imports vara actually 112,000 tona. Thus, In tha first half of 1964, foreign smelter stocks vara little affected and D.8.A. consumer stocks want up by soma 12,000 tons. In tha second half of 1964, tha foreign supply over consumption had dropped to 65,000 tons and while they exported some 100,000 tons to tha States, causing a drawdown of foreign smelter stocks, this was not enough to take care of the 120,000 ton gap between O.S.A. smelter production and consumption. Thus, It was necessary to release some 50,000 tons of lead from stockpile. I Looking now to the first half of 1965, foreign supplies would appear to be some 80,000 tons in excess of demand but this again is not enough to fill the anticipated 110,000 ton gap between O.S.A. smelter production and consumption; thus, the authorization of some 65,000 tons currently being offered froa O.S.A. stockpile. While It Is quite difficult to say what consumers will want to do about their own level of stocks. It would appear that the 65,000 tons Is as much as 35,000 tons In excess of the deficit position and unless consumers wish to Increase their stocks, It would appear i .umsttemefiAianiiiieb.. *' LIA 15 917 6m "i iitiwaninfs , .. ..... - 9 *------ that all of tha stockpile offarin* may d o c be subscribed. Id Cha second half of 1965, 1C la anticipated Chat foreign supplies will shrink co an exportable surplua of maybe 75.000 tons, which is about 55,000 tons short of cha anticipated O.3.A. consumption-smelter deficit. Thus, a further release in the second half of 1965, in all probability, will be required and should be somewhat better subscribed than the release of the first half. Any way you look at it, however, with the stockpile releases there is almost certain to be plenty of lead to go around in 1965 and with further growth in nine production in 1966, as previously pointed out, the situation should get progressively easier. With the very sizable 0. S. Covemaent stockpile remaining, adequate supplies will not be a problem. To examine the effect of increased mine production previously described, X would refer you to Chart #3 which shows free world mine production, smelter production and consunption, broken down by the same trade areas used by Mr. Wolff in his consumption discussion for 1964, and the additions likely to take place by 1968. Z have segregated Canada because of its sizable Increase in mine production. First, turning to the United States, as previously pointed out, mine production which was only slightly less then 300.000 tons in 1964, is anticipated to Increase to almost 600,000 mm -fMiri)48rtn^ Su*~ rtViiiS'ili Ua 15918 m *10-* ---------- o ton* la 1968. Smelter capacity Inert*** by St, Jo* Lead la Southeast Missouri, amounting to 100,000 ton*, should b *t capacity wall before 1968, th* now smelter announced by Amax-HocMStaka, smelting both thalr or** and Coalneo-Dresser or**, should r*pr***nt another 100,000 ton* by that tin*, sad while not y*t announced, th* general supposition 1* that AS&& and Kannacott will bring la a s laliar volume of aln* capacity and that coamensurat* sacltar capacity will b* constructed, which would increase tha U.S.A. by on* 300,000 ton* a*t. Vow, th* reason for this new saalter capac ity Instead of employing unused capacity currently existing la th* United States, is that this unused capacity is all la tha Western f United States and completely nislocated for tha new lead develop ments of Southeast Missouri. Assuming Mr. Wolff's consumption Ls increase estimates In the next four year* of soma 70,000 tons over 1964 consumption, It would appear that U.S.A. will b* vary close to self-sufficiency so far as lead metal la concerned, provided, of course, that they continue to smalt approximately th* present volume of scrap and the present volume of Imported ores amounting to soma 120,000 tons par year. Looking to free Europe, mine production is estimated to i t rise in tha four-year period by soma 130,000 tons. Smelter capacity increases in Europe have been indicated of about tha same volume, and consumption increases la tha same period ax* estimated by Mr. a s s k i.s u.1 a a: u-imm i iiiiwpiwiS .Miaja.,1 -SBwpsv--MMP mmummm mnmmrn ip* manwhim iiuiyuiuMP LIA15919 -u-- Wolff to be approximately 125,000 tons. Thus, it can be seen that by 1968 Europe will require about the ame volume of Imported oraa currently required and poeaibly 23tOOO tone leaa of Imported netel. Japan estimates an Increase of approximately 13,000 tome in mine production, new aaeIter production of 30,000 tone, and consumption la assumed to increase 63,000 tone. This would mean that Japan would be a market for an increase of 35,000 tone of lead In ores end 13,000 tone of lead metal over and above 1964. Canada anticipates Increased mine production of approximately 100,000 tons. Increased smelter capacity of 30,000 tons la Brunswick, and Increased consumption of only 10,000 tana. Thus, Canada will Increase Its exportable ora surplus by 70,000 tons and metal by 20,000 tons. The balance of tha free world anticipates mine Increases of epproxlnaely 180,000 tons, with Indicated smelter Increases of some 90,000 tons and Increased consumption of approximately 95,000 tons. Therefore, It would seem that exportable surplus metal from the balance of the free world will not change appreciably from that In existence today but the exportable surplus of ores will Increase soma 90,000 tons* If these suppositions are correct with U.S.A. requiring no additional ore Imports and 230,000 tons less of metal Imports, Europe requiring no Increase In ore Imports nd only 23,000 tone Increase In metal Inports, and with Japan having only a 35,000 too won mmm mmmsm i i p f addition*], ora requirement and 13,000 too additional natal raqulreaant. It appears that both Canada and tha balanca of tha fraa world ay ba hard praaaad to find narkata for particularly thalr lncraaaad ora pro&ictlon and possibly aona natal production alao. Tha question now arlaaa aa to whathar thara arc any undavalopad known ora bodlaa la tha world over and above tboaa antlclpatad to ba brought la between now and 1968. Tha anaver la yea thara are aona vary aubataatlal ooea. Kannacott baa two additional large ora bodlaa In Southeast Misaour1, tha Kuby Bill project in Nevada could ba aubataatlal but aa yet la aa unknown, and the MacArthur River or* body of Mt. Isa In Auatralla la reputed to ba one of the large lead-slnc reserves of tha world, to nans only tha najor ones. Therefore, I do not have any feeling but that plenty of ora reserves and potential production exists to oaks lead coasunara very confidant about supplies for nany, many years to LLL Turning now to sine. Chart #4 shows tha fra* world recoverable sine alne production, sine saalter production and sine natal consuaptlon froa 1946 through 1964 and projacted through 1968. Tha consuaptlon figures froa 1964 through 1968 era those previously PP" lyi.jpw.M a?--guw i f LIA159 21 t-- -- ~^ presented by Mr. Wolff. The statistics making up Che chart art thoaa of tha UnlCad Nat Iona Lead-Zinc Study Croup through 1964 and Include all tine produced by smelters froa both orea end acrap but do not Include sine produced by remelting acrap or sine duat. The lover linea on the chart show the ease date for the United Statea only. X would like to coeaeat here that due to sine aetel prediction depending very little on acrap and alnce direct uae of sine orea for purpose* other than aetal production historically Is about equal to the smelter consumption of scrap, the sine nine production and sine consumption curves are roughly conparablc, which nakes it a such easier aetal to analyse than lead. Looking at the free world linea, broadly speaking, the period 1946 to 1930 was a period when in general the three lines were fairly close together, representing In total a fairly balanced situation. In 1951 started the seven dark years of the sine as well as the lead Industry. This lasted until 1958 and the history of this period Is largely responsible for the short supply that exists today. In 1952 nine production had exceeded snelter production by almost 200,000 tons and even then smiIter production exceeded consumption by almost 350,000 tons, making a total gap between mine production and consumption of 530,000 tons, or a 23X excess. Only heavy buying for the U.S.A. stockpile saved the  LlUl --I lewmM**iM*%h im mmur*** LIA15922 t&eu mem*** UUfc tM .1 - 14 industry fro* complete bedlam. By 1933, the 0. 8. Industry, oo whose Market the bug* exeat* had ben dumped, plad to the United State* Tariff Commission for relief under the etcape clause of the Trade Agreements Act. The Tariff Comadsslon recommended to the Executive Department that tariff relief be given but Instead the Executive Department announced that It would buy for stockpile an additional 300,000 tons of alnc, the Idea being that this would give consumption a chance to catch up with production. The results were disastrous. While consumption did cootlnue upward, mine and particularly smelter production did too, and the gap continued, except for a one-year reprieve la 1955 when a one-shot 8-ad.lllon automobile production year In the D.S.A. gave temporary relief. In 1957 stockpile goals bad been reached and the announce ment of cessation of stockpiling was made. At this time, tdille nine production and smelter production bad come into a fair balance, they were both still some 200,000 tons over consumption. Then, and only then, did the Industry Institute curtailments of mine and smelter production but this only after dropping prices to unecoooadc levels and the building of huge metal stocks, which were to plague the Industry for the next five years. By 1958 the balance was achieved. From that year to this day, free world consumption hat exceeded ealter production and smelter vtodictlon hat exceeded mine production, both In increasing aaounta. However, due to tha huge atocka of natal built la tha 1957*1938 period continuing to hang ovar tha narkat, tha period 1958 through 1962 waa a period of depreaaed prlcea, except for a hort apurt la 1959*1960 which waa abort*lived. Looking back for a moment, the lacraaae la aInc nine production fron 1952 through 1959 changed la net but little. Only In 1960 did nine production begin to lncreaaa and thla only at a rata somewhat laaa than that of laereaeiag consumption. Thua, when tha induatry finally woke up la 1962 to the fact that con\mptlor\ had rlaen aocae 560,000 tone tinea 1958, it waa too late and tha background for today's abortage waa already laid. I night coceaent here that the apread between conauoptloo and smelter production, of 100,000 to 150,000 tone, which la ahowa on the chart between 1959 and 1962, waa actually filled by iaporta of 100,000 to 150,000 tone per year fron Eaatern Europe,principally ftuaaia, Poland and Bulgaria. In fact, tbeaa inporta are continuing ao that tha true gap between conauaptlon and total metal eupply to the free world la not aa wide aa tha chart ahowa. Aa a matter of fact, total eupply of metal and conauaptlon were fairly well balanced from 1959 through 1962, but mlna production waa lagging haAly, By 1963, tha conavaption curve had taken a aharp upturn and from 1962 through 1964 metal conauaptlon increased an additional M l f mu. .... i LIA15924 dBU iidlMfa r..ir" . Mlhs _________ ______ _____ - -16 -------------- -...... 323.000 tons, Baking tba total incroaaa In consuaptlon alnoat 1.100.000 tons between 1938 and 1964. With thla tarrlfle apurt in consumption and only a nodaat lncraaaa In aina production, tba mlna productIon-consumption gap In 1964 shows to hava baan 430,000 tons; however, whan thla la raduead by approximately 163,000 tona of laporta from Eaatern Europe plua 73,000 tooa of atockplla ralaaaa, the gap waa actually more of tba order of 190,000 tona. X will cover the 1964-1965 altuation In some detail later. You might wonder bow In the period 1939-1964 It wes possible to have more consumption than smelter production and more smelter production than mine production. The anaver la that metal and ore stocks were both huge at the beginning of that period. Ontll the middle of 1964, the drawdown of these stocks could fill the gap. However, by the end of that period metal stocks were at an almost Irreducible mlnlw end the same was true with ore stocks by the end of 1964. The year 1963 will see a tsuch closer relation ship between the lines as will be covered later. Thus, you can see that today's problem stems from lack of mine production. Except for brief periods In 1933-1936 and 19591960, new mlna production was discouraged by 12 yaars of low prices In the 1952-1963 period. While the problem was recognised by 1962 the gap between mine production and consumption was so large that leiHmiamp seswww m naan 'ey -w- -- ili<Mirii--Mi--* SdWfc(HM--i' 11[ in* ' Mil' Wt LI A15925 i lc could noc be overcome and also taka cars of tha 325,000 ton consumption Increase which took plaea in 1063*1964. Looking now to tha futura, as shown by tha chart, planted lncraasa In cine alna production is nothing short of phenomenal. Vhlla tha lncraasa of 1964 over 1963 of 300,000 tons la quits noteworthy in itself, additional planned nine increase between now and 1968 total sons 900,000 additional tons, which will bring the 1964-1968 five-year total to 1,200,000 tons of Increased nine production, or 431. Tha 1965-1968 total of 900,000 tons is aade up of approximately 235,000 tons in Europe, 75,000 tons in O.S.A., 70,000 tons in Japan, 170,000 tons in Latin America and Australia, and 340,000 tons in Canada alone. By years, the estimated increase will be 265,000 tons in 1965, 285,000 tons in 1966, 265,000 tons in 1967, and 80,000 tons in 1968. In Europe, the increase of 60,000 tons anticipated in 1965 is made up of small increases in Finland, Franca, Caraway, Creece, Ireland and Sweden, with rather major increases in Yugoslavia and Italy. Europe in 1966 will see 10,000 too Increases each in Germany and Italy with a 25,000 ton Increase in Ireland. 1967 will see a 30,000 ton increase In Italy and 20,000 tons la Yugoslavia. 1968 will see a 70,000 ton increase in Ireland, with approximately 10,000 tons in Sweden. M-m fine IWWUPSP nm'Jinu WMLIL IJJJWUWWlWJp LIA15926 ..argi -m'iftt t -w i -firiiT.t aafthiMBa U* In chi V. S. A. Incrum will hi 30,000 ton! in IMS, 20.000 In 1966, and 23,000 In 1967, beln| nade up of a new nine in Maine and lncrian in >C. Joa'a Mew York Scat! production, a aubatantlal lncriaii In Aaarlcan Zinc Coo^any and Tri-State Zinc Company in TmnuiM, and anall production coonictad with tha Southeast Miasouri load oraa. Japan will hava 20,000 ton incraaaaa aach in 196S and 1966, with a 30,000 ton incraaaa in 1967. Hooduraa will incraaaa 4.000 ton* in 1965-1966. Faru anticipate* a 50,000 too incraaaa la 1966-1967. South Korea will hava a 6,000 ton incraaaa in 1965 and Australia a 100,000 ton incraaaa principally in 1965-1966. Canada anticipator incraaaaa of 121,000 ton* in 1965, 68.000 ton* in 1966, and 131,000 ton* in 1967. Theaa ara aada up of additional pro&ictlon at Mattaganl, Orchan. Lake Dufault, Brunawick Mining & Smelting, plu* the bringing in of Conlnco'a Fin* Foint project and tha new Tin*ins project of Texaa Gulf Sulphur. Looking again at tha total free world altuatlon, line* melter ora atocka are drawn down to an alsoat irreducible uininua, it it anticipated that aaelter production will atlck vary cloaaly to ora production atarting in 1965. By 1966, tha gap between nine production and Mr. Wolff'a projectad conauuptlon la la** than tha anticipated lnporte fro* Eaatarn Europe, and by 1967 it would appear that thera will be a theoretical fraa world aurplua approximating **nwamww"waini'r i i wa irw . w w i w aw a *i mmm l iff iPM m llftlf fcilfir r fWBPPBPipWPi IP LIA15927 h i liri nTWMIWWiiti* WHSm---- III ii*lliMB>ii<ti UMi l iWtl !.!* < mm -rtmain1i1..uj,.i.<>rlirtiI--il fM luii* - 19 - the anticipated imports froa Euttrn Europe of 165,000 tone, remaining about the same is 1960. Ageln, one should not necessarily consider this as an excess becauae it la of the order of 4X of the 6 mil11on ton mine production and consumption anticipated at that time, and a change of only IX per year in the trend line of eoneuaptlon from I960 through 1968 could veil overcome It. All that can be eald la that mine production, amelter production and eoneuaptlon ahould all return to a reasonable balance by eometlae In 1966 and the altuatlon ahould remain reaaonably balanced for the next year or two there* after. Let ua examine new more closely what la happening in the 1964-1965 transition period before the gap la closed. Chart #5 la similar to the lead chart previously presented and shows U.6.A. and balance of free world supply-demand altuatlon by alx-month periods during 1964 and 1965. The following observations are of note: The first half of 1964 probably was the tightest period which will be experienced In the two-year span. The balance of the free world had an exportable ore surplus In the first half of 1964 over smelter retirements of 145,000 tons and the U.8.A. had deficit of 240,000 tons. The balance of the free world had a metal deficit of 10,000 tons end the U.S.A. an additional metal deficit mumuummi iWiirii ijjl LIA15928 ,i... . i t rr waiii-rr if aiiaNw>-'ifc'iiaittM<liMhM^wi ........................................ ....................................................... - 20 - ------------------------------------------------------------------------------------ ------------ - of 75,000 tons. Duplti tht natal deficit out*Ida the D.S.A., net laporta Into the D.S.A. aaountad to 47,000 torn during the six-month period which partially filled the D.S.A. gap. Snelter atocka both In birope and U.S.A. were drawn down sharply during the period and coneuner atocka In the 0.8.A. were drawn down eooewhat. Ore atocka In the O.8.A. were drawn down quite sharply. The aecond alx nonthe of 1944 ahowed an ora deficit In the D.S.A. of 220,000 tone with a eurpiua abroad of only 175,000 tone to fill the gap, plua a further ore atock drawdown. However, due to a 30,000 ton drop-off In consumption, principally In Europe, metal eurpiua abroad waa 65,000 tona and the D.S.A. deficit waa 105,000 tona. Thua, the 75,000 ton relaaaa of cine from atockplle in the D.S.A. allowed foreign smelter atocka to be built up slightly and D.S.A. consumer atocka to be Increased 15,000 tons, despite a modest drawdown of smelter metal atocka. Turning now to the estimates for 1965, the first half will see exportable surplus of concentrates abroad equivalent to within 20,000 tons of the U.S.A. deficit. Whether or not this volume can actually be Imported depends upon some relaxation in the D.8.A. quota order, a decision on which la long overdue and if not made soon could disrupt both consumers and producers in a major way, Hetal surplus abroad would appear In the first half to be some 40,000 tons, and the D.S.A. metal deficit of 105,000 toos cannot ; Bi iiijwMiwaW!W^WBPP!<CTpffygW<liPPgWPiPW|WW^W*H||BPPW^W^ll*^^Bgf*|W**^iyWwWW>P^*WwP>!WiWW,iw LIA15929 ImlfWiwIeiimii Muate Tnaftiifciiawai l*Mi----<i rrt 21 j^i>WMUaiMliiii Wt..i iMm j<j>rii nilr II ... IIih iM l An tA*. mtimmmmmemmtntmrnmiemmeiiuiamUShatiewSamamMMeieeiiiwm )' w i i i i u m n ui m er*It e*iy be filled. However, with an 60,000 ton stockpile release it would appear that coosut^tloo requirement! will be filled end there will be some lncreese in either snelter stocks here or abroad or la consumer stocks. Mow X know that this does not natch up with the situation you have experienced so far la the first half of 1963. Tbs reason for this is that the stockpile release did not begin uatll lta April. Without the stocl^lle release, the 0.8.A. deficit was approximately 11,000 tons per month each month la the first 9u*r*ex and if consider stocks have been drawn down by some 30,000 to 40,000 tons, it Is not surprising. However, the stockpile release should more than take care of the situation so that consumer stocks can be replenished prior to the end of the six-month period. The lest half of 1963 shows a foreign ore surplus slightly more than the U.S.A. deficit, meaning that the drawdown of O.S.A. concentrate stocks should come to a complete end by that time. Metal surplus In the foreign countries, while smeller than that la the first half, Is more then enough to taka care of the O.S.A. small metal deficit after another 80,000 ton stockpile release la this period. Thus, It would seem that the very squeaky period of 1964-1965 Is going to be adequately bridged by the stockpile releases and 1966 should see the situation getting substantially easier. $ m&m ii ' mnw'ippwyuu iwm ww^wwwtiiwpp pj.wiwwwwi LIA15930 i liiiMlwalilft MjMifTim'Tmirti I . > .- ...-.v <Arj^.MifciilirfK., ..iifioo. - 22 - Turning now to the effects upon world trada of Cba changes In wine production In tba fraa world In tha next four yaara, Chart #6 ahowa thla broken down by tba earns trada araaa as uaad by Mr. Wolff, axcapt aa In tba caaa of laad, Canada la sboast separately. Looking firat at the United States, froa 1964 to 196S ' U.S.A. wine production will be Increasing sows 75,000 tons but aaeltar output should be Increasing aone 143,000 tons. This la fKlrely logical aa In 1964 over 200,000 tons of econowlc U.S.A. swelter capacity sat Idle because of lack of raw wacerlal. Sows of thie capacity eight ti aa such as a lx Months to rehabilitate but If econoalc concentrates are available, either It will be rehabilitated or existing active saelters can easily be expanded to do thla volume of business. With e greatly easing concentrate situation contecplated In 1966*1967, this swelter Increase scans logical. Thus, by 1968 U.S.A. will Increase Its recoverable wetal in ore retirement* sooe 70,000 tons over 1964 but its actual increased Import* probably will be 100,000 to 120,000 ton* higher because sufficient concentrates were not available in 1964 to equal the U.S.A. swelter output during that period. Consuoptlon, as estimated by Mr. Wolff, will not increase aa ouch aa smelter output end thus the chart shows U.S.A. will need lass metal from outside sources than In 1964. However, since Imports of metal in that year had to be augmented by stockpile i.,hm ip-'---1 * ewuniim inu "m 'eayqqpyamwewww*- JfOMMMW.r n,nar.- .. LI A15931 Ip.n fTi muO irii - 23 * rtlMiw, if these are discontinued, actual natal iaporta should approximate or even ba Increased somewhat over thoaa of the peat few peara. Europe anticipates mine output increase by 1968 of 235,000 tone. Existing Idle smelter capacity plua announced additions will bring smelter output up some 200,000 tona while consumptlom la golos up approximately 160,000 tona. Ttua, the net ore Imports of hirope will drop somewhat between now and 1968 because of the larse Increase of Its own ore supply. Likewise, since smalter capacity la anticipated to so up more than consumption, Europe will require approximately 40,000 tona less metal from the outside than la 1964. Turning to Japan, ore output Is anticipated In the fouryear period to Increase 70,000 tons, announced smelter output by 150,000 tons, and consumption by 125,000 tona. Thus, Japan, despite its mine output Increase, will Increase Its ore Import requirements by some 80,000 tons annually but decrease its metal Import require ment* bp same 25,000 tons annually. So the three large Industrial ised areas of U.S.A., Europe and Japan, collectively, will require more ore hut less metal from outside In 1968 than la 1964. Looking at Canada, their ora output Increase la estimated at 340,000 tons, metal output Increase at 120,000 tons, and their consumption Increase at 20,000. Thus, their ore exports should wmpretgmmm "in' i a- - * - W SB" LIA15932 r- mi i^iBlinnY^r^lMn - 2* - . luertMi mn 220,000 ton* tad their MCtl exports bp 100,000 tons. The balance of the free world will increase their sloe output bp 173,000 tons, their saeltsr output bp 160,000 tons sad their consuaptlon bp 103,000 tons. Therefore, their ore exports should lacrosse bp sous 33,000 tons end their estal exports bp soet 33,000 lilli lisa Vow, If this gives eoasthlng less thsa s sice, cloer-cut, concise picture of whet is going to happen in the world froa a flow of trede standpoint, X em not surprised for it would seen thee the industrialised net loos collectlvslp ere increasing their ore output aore then their consunptloo between now end 1960 end their astel output enough to take cere of their increased coesuaptlon. Whet, then. Is to happen to the large increase in exportable ore end natal froa Canada end to a lesser extent froa the belence of the free world? The answer is that 1964 was a tremendous deficit pear both for ore production under saelter production end saelter production under consuaption. Consequently, if you add up ell of the ore productions end saelter productions in 1968, you will find that saelter production shown hereon end ore production shown hereon are Identical and balanced and that consuaption, according to Mr. Wolff, is est Lasted to he about 30,000 tons over the mins end saeltsr production. Whether or not there la s eurplua or deficit will depend on the accuracy of the nine predictions, saeltsr predictions. --------a--. - -----------1,-H..---- 2&muia & BP V itoaMfe'i LI A15933 >j*&c t consumption prediction* end last but not least, the volume of exports to the vest from Eastern Europe, which currently runs 165,000 tons per ysdb. However, the whole group of figures fits together so closely that it certainly can be said that it will be far from our present dllemns and probably in a well-balanced or slightly surplus position. Here, again, the question arises as to whether or not the Increased ore projections contain*d hereon include all of the known undeveloped ore reserve-* of tc* uorid. The answer for sine, as in lead, is no. In the Orlned Status en additional mine of some magnitude will probably come In Tennessee after 1966. Ruby Hill in Nevada, if it is successful, could add substantially to U.S.A. production, as would several other smaller projects which are now in the formative stage. The MacArtbur River deposit in Australia which, as X have mentioned, is one of the major ore bodies of the world, is predominantly a tine ore body, and if developed on the scale it could be, would be large enough to influence world figures. Many other projects are in formative stages but three to four years ahead r-. as soon as mine announcement* are made. All in all, X think that for the long run ve can feel quite comfortable ebout the potential sine reserves and sine production of the world. Since *!'< of the new mines mentlonsd IS JU ILLHiSSf II migm * Lunf^r.gati ,'iiiii|ii!iwir.iiw-np mourn* LIAl5934 ... - uMfitfaaib. - ____ * 24 ........ - ------ ------- `-- - - her*In arc known to be quite econoalc, no substantially higher price* need be forthcoaing to continue the orderly bringing la of thl Additional production. It 1* ay pereonel opinion that If both producers sad conexaeere cea orient themselves to the thought that their Interests are best served by fair and stable prices, that both will benefit froa the growth of lead and sine for aany, aany y tars to c o m. The present squeexe was brought about by too long a pa tod of too low prices and a repetition will bring about the seat thing. It Is wy sincere hop* that w* will never see a repetition of such a a*Jor Mistake. iMhiiflriltiliiKSiMiittaOSMa&alflMiai 'WHIMIS 11 i 'r MS ipw-iinm* ammmmmmm LiA15935 - rr~' ~ i - -- --^ ` - -- -- -,ir ... . LEAD: Free World and U.S.A. Kline Production, Metal Production i and Consumption (1965-68 projected) nniiiin 6 .................. nipu.. j ipmiu 'tpjfff-- 0 $ mm* N 3553.01 ittli atatld Hiia~i*<iliriiil1tlinrmir1liii LEAD: U. S. A. and Balance of Free World-Mine Production, Metal Production and Consumption by Half Years-1964 and'65 Mina Production ':/*> CHART 2 Moral Production KSWN MataI Consumption Stock Pile Ralaasa* ** iM Import* fact Sloe P pm.. y"pa-i J4UMIPMOgfflWPpEWpcwwpwBWip,,1 mi Miwpwmn.'eP--mu . N 3553.02 mms 8H mmmmmm ii ,mm, WBgB!mmmm LIA15937 m ^aamrnamiiimatimimi iU&tgMataaikfaiMSttt LEAD: Mine Production, Metal Production and Consumption by Trade Areas (1968 Increase Over 1964 projected) TNOViANM .CHART mm m*mm N 3553.03 *-- - ... ^ LIA15938 *-**-~ mfr^m-iniiiiiiliiiri--^--- --------- -- ZINC: Free World and U.S.A. Mine Production, Metal Production and Consumption (1965-68 projected) oujt t 4 iwwyiiI I jpini4iwnaypii|i.|nMiJll 'J N 3553.04 .a> m wmrnmmmmmmtmmmim i<Ttf rtwr-ffr'in tiMMibki t.. twmm LIA15939 mm OHUiiMMOMMiMha tth* ZINC: U.S.A.and Balance of Free World-Mine Production, Metal Production, and Consumption by Half Years -1964 and '65 ooo O+O *0*0 MM too ISO | ML fSKOOftt* to too *0*4USA. Min* Production Motoi Production Motol Consumption Stock Pflo Koioo*o Import* East Bloc CMMT t N 3553.05 tmtU ii 4MBirMMCii SfMaSai L I A15940 jMSnmrain ZINC: Mine Production, Metal Production and Consumption by Trade Areas (1968 Increase Over 1964 projected) HORT TON# THOUSAND* 1500 SHORT TOMS THOUSANDS 1,500 0*0 IZ50 4000 4000 750 500 150 IS44 570 uoo 10 I9S C4S 4(73 4310 U.S.A. c har t i mm 565 1,070 4390 eoo 4270 4550 FREE EUROPE 215 350 395 235 500 520 JAPAN 660 355 S3 4000 455 105 CANADA 4110 475 470 4235 6 IS 575 BAL. FREE WORLD N 3553.06