Zeal for Zinc
Red Dog Mine feeds the hunger for a critical metal
By Isaac Stone Simonelli
pac man graphic

veryone knows Alaska’s economy is dominated by oil and gas, but not when it comes to foreign exports. The most valuable commodity Alaska sends to other countries is, in fact, zinc ore and concentrate. As of 2020 (the most recent data compiled by the US Census Bureau), Alaska exported $730 million worth of zinc. That’s down from over $1.2 billion in 2017 but still more than the $556 million worth of petroleum exported (because most Alaska petroleum is consumed domestically). When the rest of the world looks at Alaska’s resource output, they think zinc.

Zinc consumption has gone from about half a pound per person globally in 1960 to about four pounds in 2020. The metal is nearly ubiquitous, showing up in everything from dietary supplements and sunscreen to fertilizer and ordinary alkaline batteries. The most prominent use of zinc, though, is as a galvanizer: protecting both iron and steel from corrosion.

“We are galvanizing—making corrosion resistant steels—in greater quantities than we ever have before,” says David Hammond, a mineral economist at Hammond International Group who also works as a consultant for NANA Regional Corporation. “A lot of infrastructure uses zinc metal in it.”

NANA leases the mineral rights of the Red Dog Mine northwest of Kotzebue. Through an operating agreement with Teck Alaska Incorporated, Red Dog produced 491,000 tonnes of zinc in 2020, making it the world’s largest producer of the metal, with the largest reserves.

Red Dog Mine is responsible for 73 to 75 percent of all US zinc production, according to NANA Vice President of Natural Resources Lance Miller. Red Dog also produces significant quantities of lead (Alaska’s third most valuable export) and some silver, but zinc contributes about 80 percent of the product value of the surface mine.

Due to its primary use to prevent rust, zinc demand is intrinsically connected to infrastructure development both within the United States and abroad. It’s used in rebar, cars, guardrails, brass fixtures, and so much more. “Almost everything you can think of where you don’t want it to rust,” Miller says.

Within the last decade, zinc prices rose such that a penny’s worth of the metal costs more than $0.02. That is, every penny is made of 97.5 percent zinc, and demand for the resource is so high that the cost of minting the coins exceeds their face value.

Situation Critical

The US Geological Survey (USGS) proposed adding zinc, along with nickel, to the nation’s critical minerals list in a revised draft of the list announced in November 2021.

“The USGS’s critical minerals list provides vital information for industry, policymakers, economists and scientists on the most important minerals when it comes to US supply chains,” says Assistant Secretary of the Interior for Water and Science Tanya Trujillo.

A critical mineral is defined as a non-fuel mineral or mineral material that is essential to the economic or national security of the United States and is vulnerable to disruption. The USGS move comes as zinc inventories run low, dropping by more than 50 percent over the last five years.

“This was drafted as zinc inventories decline and spot prices rise in a context where the United States and several other nations, including the European Union, announce major infrastructure investment plans that will require zinc for galvanization of steel components,” states a press release from Osisko Metals, a Canadian exploration and development company.

“The Western world kind of let both the mining and the smelting and refining of zinc get away from it… Where the smelting and refining gets conducted is probably in my mind more important than finding the zinc deposits.”
David Hammond, Mineral Economist
Hammond International Group

The Osisko statement adds, “Further exacerbating the situation, North American supply production is expected to decline by over 35 percent in the next three years due to mine closures and falling production in older mines, highlighting the placement of zinc as a critical metal.” Osisko’s reaction to the USGS listing concludes, “There are very few zinc development projects in the pipeline to meet production shortfalls this decade.”

Zinc can be recycled. Indeed, recycling is relatively economical, and the metal retains its physical properties in the process, according to the International Zinc Association. But recycling is only able to meet a small portion of the demand for zinc, Hammond points out.

There is only one primary zinc smelter facility in the United States: the Nyrstar smelter at Clarksville, Tennessee. That facility alone does not meet domestic demand, though, with the country importing 710,000 tonnes annually, according to the USGS. Thus, more than 80 percent of the domestic consumption of the metal comes from imports.

“Zinc mine production runs, let’s say, 12.7 million tonnes of finished zinc coming from primary production… coming right out of the mine,” Hammond says of global production. “There’s another million plus tons of finished zinc that comes from recycling.”

Because of the price for zinc—even in its heightened state—the concentration in the ore needs to be significantly higher than many other materials.

“If I’m mining copper, if I have dirt where less than 1 percent of a ton of it is actually copper, that’s pretty good,” Hammond explains. “For zinc, I need grades that are up around, say 14 percent—certainly over 10 percent—in order to make an economic go of it.”

Red Dog Mine meets that requirement.

Zinc’s Journey

The two most visible features of Red Dog Mine are its huge open pit and, about 50 miles away on the Chukchi Sea shore, two long buildings with peaked roofs, painted bright red, white, and blue. These are for temporary storage of zinc concentrate. Hammond explains that ore is immediately processed into concentrate composed of about 50 percent zinc, which looks like dark black sand. Trucks haul the concentrate to the port, about fifty loads per day, every day. From October to June, the concentrate is heaped inside the two storage buildings. When safe passage is possible on the Chukchi Sea, Foss Maritime barges the concentrate to cargo vessels waiting offshore, which ship the zinc to smelters. Sea ice conditions permit, on average, about twenty-three shipments per year during the 100-day summer shipping season.

One-third of zinc from Red Dog is exported to British Columbia, where Teck owns a smelter called Trail Operations. It’s one of the world’s largest fully integrated zinc and lead smelting and refining complexes. The concentrates are first treated in either roasters or pressure leach plants. Then impurities are removed before the zinc is electroplated onto cathodes in an electrolytic refining plant. Finally, the cathodes are melted so the zinc can be cast to order.

Miller explains that Red Dog’s zinc is roughly split between smelters in Canada, Europe, and Asia. Europe gets roughly 43 percent, leaving 25 percent for smelters in Asia.

“You want to send your product around to a lot of different places—just not too many—for diversification, making sure that you’re getting competitive rates,” Miller says, adding that a mine also doesn’t want to be overly dependent on a single smelter.

Most of the concentrate is tied up in long-term contracts at market prices, which are subject to annual negotiations. The remaining amount is sold on the spot market based on prevailing market quotes, according to Teck.

Although Red Dog sends the lion’s share of its zinc concentrate to Europe and Canada, Hammond points out that most global zinc smelting is done in Asia. First it was in Japan and Korea, and, most recently, in China.

“The Western world kind of let both the mining and the smelting and refining of zinc get away from it,” Hammond says. “Where the smelting and refining gets conducted is probably in my mind more important than finding the zinc deposits.”

Limited Supply

While smelters play a key role in the supply chain for zinc, the relatively few zinc mines—when compared to copper or other types of mines—means that any disruption to operations can cause a short-term spike in prices.

“These supply disruptions tend not to last for five or six years. They get addressed,” Hammond says. “If the zinc price goes up, some mines that stopped producing might start producing again. And that would bring down the price.”

Currently, there are fewer strong zinc deposits being mined now than just a few years ago, Miller explains. “So then when the market anticipates that the supplies are getting tighter, that of course drives the price up—and prices are up right now,” Miller says.

Hammond is quick to note that some of the recent closures of zinc mines in the United States were not related to the economics of the mine. “They closed because they just ran out of ore. There was nothing left to mine in them—they were depleted,” Hammond says.

“If you say the price of zinc is high, we need to go look for a new zinc deposit and build a new zinc mine—that doesn’t happen overnight… Once you find something and you say, ‘This looks like it would be profitable to invest in and bring online,’ you have five to ten years of environmental permitting that you have to do.”
David Hammond
Mineral Economist
Hammond International Group

As of the end of 2020, the Red Dog Mine was estimated to still have 46 million tonnes of ore at a grade of 12.9 percent zinc remaining in the mine. Red Dog Mine is currently estimated to stay in production until 2031.

Teck is proposing 2022 exploration programs on state lands comprising surface geoscience studies on and drill testing to advance the Aktigiruq project, explains Les Yesnik, the general manager for Teck’s Red Dog operations.

“These programs are important to provide long term optionality for the mine,” Yesnik says. The mine is currently constrained by its existing ore body and tailings storage facility. “If additional resources such as the Anarraaq and Aktigiruq exploration targets prove feasible for development, and if a suitable location for additional tailings can be found, the mine life could be extended.”

Eat This Mineral

While galvanizing makes up 60 to 70 percent of the use for commercial zinc, there is a significant amount that finds its way into other products.

For instance, long before zinc was on the US critical mineral list, then-UN Secretary-General Ban Ki-Moon named the metal a “life-saving commodity” in the 2012 UN Commission Report.

An estimated 450,000 children die every year from zinc deficiency related issues, according to the International Zinc Association. Additionally, a zinc deficiency has been linked to the stunted and impeded intellectual development of more than 140 million children under the age of five, according to the Zinc Saves Kids Initiative.

The initiative is a partnership between the International Zinc Association and UNICEF to provide zinc and multiple micronutrient powders that include zinc to young children in developing countries who are most affected by zinc deficiency. The program includes efforts to increase awareness and access to training for medical professionals, as well as assisting with logistics management.

“The challenge isn’t producing more zinc; it is getting zinc to those who need it most. That requires educating health workers, mothers, and caregivers and advocating with the local government about zinc’s importance for human health,” states the Zinc Saves Kids Initiative website.

Charging Forward

Hammond estimates that consumption for zinc will continue to increase over the long term for the foreseeable future, as technological innovations find new uses for the material.

Zinc-ion batteries are a proposed replacement for lithium-ion, currently the most common type of rechargeable battery. Key minerals—cobalt, lithium, nickel, and copper—needed to make lithium-ion batteries are in short supply or are becoming increasingly expensive as demand rapidly increases.

Several companies around the world are developing zinc-ion batteries as an alternative, such as Zinc8 Energy Solutions in British Columbia. If zinc-ion batteries or any other new technology reliant on the metal becomes a dominant force in the market, it will only further increase the demand and consumption of the metal.

To meet a future demand, Hammond believes the groundwork for domestic supply must be laid decades ahead of time.

“If you say the price of zinc is high, we need to go look for a new zinc deposit and build a new zinc mine—that doesn’t happen overnight,” Hammond says. “Once you find something and you say, ‘This looks like it would be profitable to invest in and bring online,’ you have five to ten years of environmental permitting that you have to do.”

He notes that in some cases, where there are significant hurdles in the permitting process, it can take twenty years or significantly longer.

“It seems like the public is becoming more aware of the need for metals in society, not that they necessarily like mining,” says Miller. “Yet at least for commodities like zinc and copper there is a growing understanding of how important minerals are. Zinc is really one of the fundamental building blocks of our quality of life, our lifestyle, today.”