ZINC DIVISION: Commitment to be the Best

By his own calculations, Noranda’s senior VP of zinc, George R. Jones, rates Canada as the world’s largest producer of zinc metal. Canadian production this year he estimates to be 794,000 tonnes of metal, leaving Japan in second place. Noranda by itself is the world’s third largest mine producer of zinc, and ranks fourth in terms of zinc metal production.

Worldwide zinc production this year, including zinc contained in concentrates, is expected to reach 7.8 million tonnes, 6.0 million tonnes of which will come from the Western World. Forecasts from less developed countries such as China are unreliable.

Being a big zinc producer is good, but Noranda is determined to be the best. Through its Margin Improvement Program, major changes at its mines and plants will boost productivity ever further. Cash costs per pound have been steadily falling, reaching US$0.32 compared to the average selling price of US$0.49. Such cost control places the company in an excellent position in a strong market.

“Zinc fundamentals are good right now,” Jones notes. “Demand is growing at 3% per year and holdings at the LME [London Metal Exchange] are less than 300,000 tonnes, so we don’t see a substantial metal surplus in the near future.” Demand, he added, follows industrial activity, which has been quite good in Europe and “really hot” in the United States lately.

Eighty per cent of Noranda’s zinc is sold to customers in the United States, mainly east of the Mississippi River. From the refineries in Timmins, Ont., and Valleyfield, Que., zinc is shipped by rail or truck, often reaching the customer overnight. The remaining 20% goes to Canadian, European and Far Eastern customers. Of the zinc sold to our southern neighbour, 80% is destined for the steel industry, particularly the continuous galvanizing sector.

“Zinc’s great advantage is in extending the useful life of a product,” explained Jones, “and it is completely recyclable.”

Noranda has a two-pronged market development effort. First, the company works closely with individual clients to improve their galvanizing techniques. At the Noranda Technology Centre, the galvanizing lines of most customers can be simulated and process improvements discovered. Second, Noranda sponsors research and development on a global scale through the International Zinc Association. The IZA promotes zinc usage in a wide range of applications, including galvanizing, dietary supplements, sunburn protection, batteries and more.

Before a company becomes one of the world’s leading zinc suppliers, it must mine, concentrate and refine its reserves. Here is a look at Noranda’s major operations in that sector.

Zinc Division operations as of year-end 1999

* Heath Steele was closed due to depletion of reserves at the end of October 1999.

** The Bell Allard zinc mine began commercial production in January 2000.

*** Brunswick produces a silver dor that is sent to Noranda’s CCR refinery for further refining.