There are two process routes for producing finished zinc: electrolytic and smelting. Both require large amounts of energy to produce the finished product. Around 90% of global zinc production is produced via the electrolytic process.

The embodied energy in zinc production is, on average,
between 49-55GJ/t, this puts the total annual energy required to produce zinc
globally between 686-770PJ.
Around 30% of zinc produced is recycled or secondary zinc. The
embodied energy to produce recycled zinc is on average 25-40% of primary
production at around 13-20GJ/t.
Currently around 14Mt of zinc are produced annually. By 2040 AME
estimates the global zinc production to rise 45% to 20.3Mt. To put this into
perspective this means around an additional 330PJ of energy will be required to
ensure this supply is met.
Zinc Production
and Power Problems
Due to the amount of power required in zinc production it is
particularly susceptible to changes in energy supply and price. Following the
global disruption cause by Covid-19 the zinc industry has faced multiple
challenges to return to pre-pandemic levels, largely these have been related to
the vulnerability of supply to energy costs.
European Energy
Crisis
Europe,
which supplies around 15% of global zinc annually, has been in the grips of an
energy crisis since October 2021. The prices for gas, oil and coal have reached
unprecedented levels, which has led to widespread production cuts across Europe
as companies grapple to balance rising electricity costs with the rising zinc
price and demand.
Nyrstar
cut production by up to 50% in October 2021 at its three European smelters,
Balen in Belgium, Budel in the Netherlands and Auby in France. It further fully
cut production at Auby in January 2022 before bringing the smelter back at a
reduced rate in March 2022 in light of the record high zinc price.
Similar
cuts were seen by Glencore who put the Portovesme smelter in Italy onto care and
maintenance in January 2022.
While
these price issues began as a result of extremely low gas storage levels and a
cold winter, they have now been exbasberated by the Russia-Ukraine conflict
which has cause the gas price to dramatically increase due to instability fears
over supply.
There
is ongoing concern that high prices will be a regular issue in the winter
months for the foreseeable future and so producers are increasingly looking
into alternative green electricity supply to not only help to meet carbon
targets but to safeguard power supply for the future.

Chinese Production Curtailment
China was also plagued by energy supply issues in 2021 causing a
raft of production shutdowns. Companies in Inner Mongolia and Yunnan provinces
found themselves told to limit consumption, and subject to rolling blackouts.
These issues came from a combination of problems which compounded including,
flooding in key coal producing regions, new green energy policies implemented
by the Chinese Communist Party which were unable to meet demand following
Covid-19 recovery, severe droughts in the Yunnan province which caused a
shortfall in expected hydropower energy. Furthermore, the Chinese ban on Australian coal
in the later half of 2021 also led to coal shortages, which helped dent Chinese finished zinc production, which accounts for around 44% of global
supply.
What the Future Holds
While the future may be uncertain, we can assume that the global
appetite for zinc will not subside and with the global push to reach carbon
neutrality it will in fact see zinc demand grow. But for this to happen
companies will need the additional energy require to meet the demand.
By 2040, AME estimates the global zinc production will increase
to 20.3Mt. Requiring additional 330PJ of energy to put the energy consumption
of finished zinc at around 1,000-1,100PJ. To fully power the zinc industry by
wind power this would require around 16,000–18,000 new wind turbines to be
built. For context, Queensland’s biggest wind farm, which is part owned by Ark
Energy, a subsidiary of Korea Zinc, and helps power the Townsville Refinery,
has 162 wind turbines.

More companies are realising the importance of energy management
and are looking into long-term solutions of self-supplied green energy
solutions to end their reliance on grid-connected energy and the implications
on price and in some cases reliability that these come with.
Energy is one of
the biggest expenses for mining companies, on average totalling approximately
30% of total cash operating costs, therefore the rewards or repercussions of a
change in energy cost can be huge. The problem with reliance on green energies
however, and as highlighted by the issues in China in 2021, is they do not
guarantee for a consistent energy supply.
If there is a lack of the necessary
conditions the energy supply will drop impacting any production, and with more
extreme weather patterns becoming more commonplace this needs to be addressed
before a real switch can be made.
While in the long run battery storage looks set to become more
utilised as a solution for power continuity to store additional energy until
required, this is not currently utilised on the commercial level needed for all
industry.
Hybrid solutions are becoming more commonplace which are likely
to be seen in the medium term as operators balance carbon targets with
realistic production needs. One of the things companies have in place to help
mitigate renewables unreliability presently is renewable Power Purchase
Agreements (PPAs). PPAs are contracts to buy renewable energy in agreed volumes
and at prices that meet the needs of the generator and the consumer. These are
in place to guarantee a supply of energy to operations.
But it seems at least for the foreseeable future the zinc price
and supply will be driven by power cost and availability and any issues to
these areas could see the current climate replicated.