ZincOx to recycle zinc from steel mill waste

ZincOx Resources has launched a plant in South Korea to extract zinc from the waste produced by the country's steel mills, using a technology it forecasts will shake up the global zinc industry.

Andrew Woollett, executive chairman, said Aim-quoted ZincOx was shifting its business away from mining to recycling with its $110m plant near Pohang, the eastern city at the heart of the Korean steel industry. He plans to use the plant as a showcase to export the company's recycling model to steelmakers in Thailand, Turkey, the US and China.

ZincOx has worked for six years on its technology to extract zinc from furnace waste - a process long considered too difficult and costly - and forecast it would pull the company into profit this year. The company reported a net loss of £3.5m in the first half of 2011 and £112m in 2010, mainly because it had to write down the value of a mine in Yemen where working became too dangerous.

ZincOx recently introduced the first batch of waste dust from the furnaces of steelmakers such as Posco, Hyundai, Dongkuk, Dongbu and Daehan. It will need to run tests for three or five more weeks before beginning production of zinc, which is used as a protective coating on cars and white goods.

The plant will gradually ramp up annual output to 92,000 tonnes of zinc next year, which Mr Woollett said would represent about 15 per cent of Korean zinc demand.

"That would be equivalent to having the fifth-largest zinc mine in China," he said, adding the metal would be purchased by Korea Zinc, the company that lent $50m towards the construction of the factory, where 55 people work.

Mr Woollett said the steelmakers were attracted to the scheme because they had to pay $40 to $50 for each tonne of waste removed, while ZincOx would take it for free.

Zinc prices are historically volatile and fell from about $4,500 a tonne in 2006 to just over $1,000 a tonne in late 2008. The prices have now risen to more than $2,000 and Peel Hunt, a stockbroker, estimates the Korean projects will break even with prices over $1,100.

Mr Woollett acknowledged competitors would be keen to catch up and estimated he had a first-mover advantage of 18 months.

"Companies put more energy and resources into R&D when they know there's an answer," he said.

He would use his time cushion to find other international steelmakers interested in recycling technology. "It's very important to get the dust supply," he said, adding that he was forging strong ties with the steelmakers by offering deals where the waste suppliers would be compensated for rises in the zinc price. "We cut them in on the upside."

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