How Australia Became A Lead Mining Powerhouse

How Australia Became a Lead Mining Powerhouse

Australia was the second-biggest producer of lead in 2011, with 560,000 metric tons (MT) of output, according to the US Geological Survey. China continued to be the leading lead producer, with 2.2 million MT of output last year.

However, Australia has the largest lead reserves in the world, at an estimated 29 million MT, largely on the strength of Mount Isa in the north and major deposits that have been developed at the McArthur River, Cannington and Century projects.

Lead has strong prospects in the coming years, mainly due to its connection to the battery market (which accounts for 80 percent of lead consumption). Long-term trends, like the rising popularity of e-bikes and increasing automobile sales in developing countries, should help boost lead demand and prices. That should support Australia's lead-mining sector.

In the near term, China's battery-making industry is restarting after the government shut down 90 percent of the country's manufacturers due to lead-poisoning concerns. China's lead-acid battery output rose 21 percent in the first half of 2012, according to Bloomberg. That should also help increase lead prices.

A short history of Australian lead mining

Lead was the first metal mined in Australia, at Glen Osmond, near the city of Adelaide, starting in 1841. In 1883, silver and lead ore were discovered at Broken Hill in New South Wales. The Broken Hill Proprietary Company — or BHP — started a mine on the site in 1885. In 2001, BHP merged with rival Billiton to form BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT), the world's largest mining company by revenues.

Another large deposit, Mount Isa, located in Queensland province in the country's north, was discovered in 1923 by prospector John Campbell Miles. The city of Mount Isa has since developed next to the site, and a rail line was built to link the mine to the coast in 1929. Xstrata (LSE:XTA) now owns and operates the Mount Isa mine.