The 2014 Metals Outlook: Silver, Zinc, and Lead

Australian Mining has investigated the current state of Australian metals and looks into how they will perform in the coming year. In the final part of this five part series we look at silver, zinc, and lead

Silver lead and zinc appear to have been some of the few metals not to benefit from the mining boom.

From the start of the turn around in metals through to the height and eventual decline of the boom, these three metals saw an annualised decline of 6.1 per cent.

However a major turnaround is predicted for the sector.

"Industry performance is expected to improve over the five years through 2017-18 due to the interplay of higher output, firmer US dollar prices for silver, lead, and zinc, and a weaker Australian dollar," IBISWorld states in its report on the sector.

"Industry revenue is expected to rise at an annualised rate of 2.8 per cent, eventually reaching $5.5 billion in 2017-18."

However there are hurdles to overcome in the short term, IBISWorld explaining that "the price of silver is expected to fall slightly in 2012-13 – this trend is a threat to the industry".

On the opposite side of the spectrum zinc and lead prices are expected to trend upwards.

China is the world's largest consumer of refined zinc, and accounts for nearly half of zinc used globally.

Luckily for zinc this demand from China will continue to grow.

"Demand for zinc from other developing countries such as India will also rise and demand from Japan will increase due to rebuilding in the wake of the 2011 earthquake and tsunami."

Overall demand for zinc is expected to rise globally over the next five.

However for the moment the zinc industry in Australia is hurting.

This year alone saw changes to MMG'sCentury mine with workforce requirements altering as it turns to rehabilitation and closure work, and Terramin put its Angas operation into care and maintenance,slashing 115 jobs in the process.

MMG's Dugald River mine also has a precarious future, with the miner cancelling contracts, how MMG told Australian Mining that it is still undertaking extensive mine development work.

"To focus resources on the mine method review and manage short term capital expenditure, the company has decided to suspend most earthworks at the project site. This includes ongoing engineering, procurement and construction of the processing facility for the Dugald River project," MMG said in a company statement.

MMG went on to state that "the review of the Dugald River project is expected to be completed by the end of 2013".

"Accordingly a final investment decision regarding the development of the Dugald River project will only be made once this review is completed."

Despite some relief with a slight growth in zinc and lead the "industry's performance is [still] characterised by high levels of revenue volatility".

"Substantial year-to-year shifts in output occur, reflecting variations in mining conditions as well as decisions to open mines, expand existing ones, and vary the composition of the ore mined," IBISWorld stated.

Overall growth will occur next year, with a 3.8 per cent jump in revenues, a 8.8 per cent increase the following year, after which the industry is predicted to stabilise at an annual growth rate of 2.5 per cent for two years and then experience a dip of 4.9 per cent in 2017-18.

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