Zinc mines in China: characteristics and cost drivers Report

Insight 25 January 2017

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Report summary

China is the world’s largest producer of zinc in concentrate accounting for 40% of global supply. Typically, low labour wages, consumable and freight costs give Chinese zinc miners an advantage over their counterparts in the rest of the world. However, most mines in China are very small and have poor productivity which coupled with higher power costs means that these advantages are frequently offset. In this insight we have compared some of the key characteristics of Chinese mines to their counterparts in the rest of the world.

Executive summary
- Cash operating C1 cost for mines in China in 2016, on a country basis and a mine basis
An overview of Chinese zinc mine characteristics
An overview of key cost drivers for zinc miners in China
- Labour costs
  - Delta between realised global benchmark TC and China domestic TC
  - Exchange rate
  - Conclusion

Tables and charts

This report includes 11 images and tables including:

Locations of the mines and smelters covered in Wood Mackenzie's cost service
Zinc mines in China: characteristics and cost drivers: Image 3
China's standard for classification of mines

Percentage of production by mine size for China and rest of world
Economy of scale demonstrated by costed zinc mines outside China
Key identifiable cost metrics for zinc mines in China compared to rest of world average
Zinc mines in China: characteristics and cost drivers: Image 1
Comparison of 2016 labour earnings and productivity between major zinc producing countries
Power price and fuel cost comparison between China and other major zinc producing nations
Zinc mines in China: characteristics and cost drivers: Image 9
Evolution of exchange rate of major zinc producing countries since 2012