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THE CONSOLIDATED ZINC CORPORATION

ENCOURAGING RESULTS

WELL BALANCED RANGE OF ACTIVITIES  

Mr. John R. Govett's Review of Operations  

The First Annual General Meeting of The Consolidated Zinc    

Corporation Limited will be held on June 15 in London.       The following is an extract from the circulated statement by

Mr. John R. Govett, the chairman:-

It is my pleasure to present to you the report and annual accounts of The Consolidated Zinc Corporation Limited for the period ended December 31, 1949.

These are the first published accounts of this company; and, although the past history will be well known to those of our share- holders who were formerly stock- holders or shareholders of The Zinc Corporation, Limited, or who were holders of Ordinary shares in Imperial Smelting Corporation Limited, it may not be   out of place if I open my remarks by briefly recapitulating   the salient points underlying the formation of this company and our broad objectives for the

future.

The Consolidated Zinc Corporation Limited was formed at the   beginning of last year. Soon after its formation The Consolidated Zinc Corporation Limited offered to acquire, in exchange for its own shares, the whole of the issued capital of The Zinc Corporation, Limited, and it also purchased from The Zinc Corporation, Limited, the whole of the issued Ordinary capital of Imperial Smelting Corporation Limited, which had been acquired by that company in the previous year on a share exchange basis.

The Zinc Corporation, Limited, formed in 1911 to treat accumulated mine tailing dumps at Broken   Hill, New South Wales, soon became an active producer of lead,   silver, and zinc ores; over the past 25 years it has developed into one of the leading mining companies in the Broken Hill field—in fact, in the world.

PRODUCTION FIGURES

In 1949 the Zinc Corporation's production in terms of recoverable metal contents amounted to over 68,000 tons of lead, 41,000 tons of zinc, and 1,435,000 ounces of silver. The combined output of Zinc Corporation and New Broken Hill Consolidated to-day represents more than half of the total   output of recoverable lead and zinc from the Broken Hill field.

Imperial Smelting Corporation is the sole producer of primary zinc metal in the United Kingdom, and has been largely built up on the treatment of the raw materials derived from the Broken Hill mines. Its operations cover not only zinc metal and its alloys but also include the production of the zinc pigments; it is also a large producer of sulphuric acid and owns important interests in the chemical and fertiliser industries, and is actively developing the production of fluorine and fluorine compounds.

The company also acquired the whole of the issued share capital of Sulphide Corporation, Limited. The assets of this company in Australia, comprising works at Cockle Creek, near Newcastle, in N.S.W., Australia, producing sulphuric acid, superphosphate, and   cement, have since been transferred to a new company, Sulphide   Corporation Pty. Limited,   which has been formed in Australia to carry on the business   there. The acquisition of the undertaking of Sulphide Corporation,   Limited, was in furtherance of the policy announced by the Zinc Corporation in January, 1948, for joint action with New Broken Hill Consolidated Limited and Imperial Smelting Corporation Limited in the development   of industries in Australia—in particular the extension of zinc   smelting and allied industries.

OTHER AUSTRALIAN INTERESTS

In addition, through its wholly owned subsidiary company. The Broken Hill Corporation Limited, the Consolidated Zinc Corporation holds other important interests in Australia. These include a substantial interest in New Broken   Hill Consolidated Limited, which has already made considerable Îirogress in the development of leases on the main line of lode at Broken Hill adjoining the leases of the Zinc Corporation Limited.

Through The Broken Hill Corporation Limited the Consolidated   Zinc Corporation also owns a 50 per cent. interest in The Broken Hill Associated Smelters Pty. Limited. This Australian company jointly owned with North   Broken Hill Limited and Broken Hill South Limited, treats, at its lead smelter at Port Pirie. South Australia, the whole of the output of lead concentrates from all   the operating mines in the Broken Hill field. Over half the lead concentrate supplies to The Broken Hill Associated Smelters Pty. Limited are to-day drawn from the mines of The Zinc Corporation Limited and New Broken Hill Consolidated Limited.

Consolidated Zinc Proprietary Limited, a wholly owned Australian subsidiary, controls a   number of other companies in Australia, among which may be

instanced:—

Southern Power Corporation Pty. Limited, now engaged in erecting a new power station at Broken Hill with a rated capacity in the first instance of 9,480 k.w. to supply the increasing needs of the Zinc Corporation and New Broken Hill Consolidated Limited for power and compressed air.

Heron's Creek Timber Mills Pty. Limited, which owns freehold and leasehold forest areas m   New South Wales with saw mills for supplying a considerable proportion of the mining timber required   by The Zinc Corporation,   Limited, and New Broken Hill Consolidated Limited.

Enterprise Exploration Ply. Limited, which in addition to providing all forms of geological and   geophysical exploration services for the Zinc Corporation and New Broken Hill Consolidated, undertakes similar work on contract   for third parties.

Titanium and Zirconium Industries Pty. Limited, engaged in the   investigation and exploitation of a large area of mineral bearing sands on Stradbroke Island, bing off the mouth of the Brisbane River, Queensland. A pilot plant for the separation of rutile, zircon, and ilmenite is nearing completion   and will shortly be in   operation.  

There are, in addition, other subsidiary companies, but the

above will serve to outline the very extensive field covered by the activities of the parent company, and its operating subsidiary   and associated companies.  

FINANCE

With regard to the financial results, it is encouraging to see that   the profit for the year, before taxation, amounts to £3,453 429 and, after providing for fixation, the net profit is £1,375,702. This result is most satisfactory, but I feel it is only prudent to point out that these profits were earned largely during a period of high metal prices and that there is a background of increasing production costs, the full effect of which   will be felt on a falling price trend. We would be wise therefore to regard these first results as   somewhat exceptional, and not to assume that they will be easily repeated in future years.

As the shares in the subsidiary   companies were not acquired until April 12, 1949, the profits for the

first three and a half months of the year are not available for distribution, and have been transferred   as pre-acquisition profits to   capital reserve. Nevertheless, the profit for the remainder of the year has been sufficient to pay dividends on Ordinary shares which will give shareholders an equivalent return to that received from The Zinc Corporation, Limited, last year, and to carry forward undistributed profits of £183,303. This figure, added to the considerable sum of £550,621 transferred to capital and revenue reserves, gives a total amount of £783,924 retained in the business out of the profits earned during

the year.

The provision for taxation amounts to £2,077,727, which is 60 per cent, of the profit before providing for taxation, and this constitutes a very heavy burden indeed. The charge for depreciation for the year of £427,587 is   greater than the normal annual wear and tear allowance, but, even so, would not provide adequate funds to meet present replacement   costs. Much bas been   said recently on the need for some relief from taxation to enable companies to make adequate   provision for replacement of plant and equipment, but the importance of the question to industry   is so great that no apology is needed for re-emphasising it here. So long as allowances for taxation purposes are based on the original cost of fixed assets and replacement costs continue to be so much higher than original cost, industry will find difficulty in financing the normal replacement of plant and equipment when they become worn out or obsolete. With the present, immense burden of taxation on companies and  

individuals there are inadequate savings available for capital replacement purposes and there is   every reason to fear that the position tion will become progressively

more acute.

OPERATING SUMMARIES

As will be seen from the brief reports on the activities of the principal operating subsidiary companies which are appended to this statement, the operating results for the year have been very   satisfactory. Outputs have been well maintained, and in many instances increased to new high   levels. These reports will enable members, who formerly received the separate report and accounts of these individual companies to obtain a continuous picture of   the operations; there is also included a brief outline of the progress   of the development plans   of New Broken Hill Consolidated Limited.    

LEAD AND ZINC PRICES

The year 1949 was marked by violent price movements in lead and zinc both in the United States and the United Kingdom. From a high point of 21½ cents per lb on March 7, 1949, lead in the United States, in sympathy with the major commodity movements and the general business trend, declined during the year to the 12 cent   level. Zinc similarly moved from a peak of 17½ cents per lb to a low of 9 cents per lb.  

The high and low figures for the United Kingdom Government controlled prices in the period prior to devaluation were in the case of lead £123 and £75/10/0 per ton, and in the case of zinc £106 and £58. In the period after devaluation the lead price fluctuated between £122 and £97 and zinc between £87/10/0 and £81/10/0.

There is a school of thought that would argue that the day-to-day fluctuations of a free market   might be regarded as healthy   compared with the movements that we have witnessed during this period. It is not easy to pass judgment on this point, but it will be plain to most observers that the influence of United States stockpile buying and United Kingdom Government bulk purchasing,   has added a fresh speculative impetus to markets where price     levels have always been somewhat volatile.

In the early spring of this year after settlement of the American coal strike business conditions in the United .States showed a definite improvement and markets   once again began to advance. Whether this condition will be maintained over the rest of the year I am not in a position to judge, but I see nothing which causes me to modify the view I expressed to Zinc Corporation stockholders in August last year, namely, that we may continue to expect a level of prices which will bring a reasonable reward to all our enterprises. I cannot, however, stress too strongly the fact that our prosperity must still depend so greatly on the American economy. Though our products are   mainly sold in the sterling area, the prices which we receive are tied to dollar quotations, which in, turn reflect the trend of business conditions in the United   States.      

PRICE CONTROL INEQUITIES

In Australia the controlled domestic prices for both lead and zinc   were raised from £A22 to £A35 per ton in the case of lead and from £A22 to £A40 per ton for zinc as from January 1, 1949. These quotations are of course not comparable with the prices paid by United Kingdom and United States fabricators and, indeed, other consuming countries. The authorities in Australia have so far not responded to our repeated and well-reasoned applications   which amount to no more than a fair re-adjustment of prices. While we appreciate the problems with which the authorities are now faced we doubt whether any such inequitable treatment has resulted from the control of prices   in any other country where the price-control system has been in operation. During most of the year under review Australian fabricators were receiving their lead   and zinc supplies at approximately one-third of the cost charged   to their competitors in all other countries. We cannot believe that such a distortion of economic

facts can build up healthy   fabricating industries, nor is it possible that any other industries have been subsidised to the same extent by their own Government, let alone by public companies on whom such industries are depending for their raw material supplies.   If a case can be made for subsidising these industries or even   the consumers of their products, this is surely a matter for a Government subsidy, the cost of   which should be home by the general body of taxpayers and not by a section only of an important individual industry.  

CONCLUSION

This review will I trust give all members a composite, if somewhat fleeting, picture of our various activities. One of our best assets is a loyal and efficient personnel, with first-class leaders at the head of individual units and abundant team spirit throughout the organisation to back them   up. In paying tribute to their excellent service in the past, I know the future progress of our affairs will be safely carried out in their hands.

We know, from past results, that our scale of operations at to-day's outputs provides an economic and well-balanced range   of activités. Immediate plans for future development envisage a widening of our activities, and it is in the consideration of the technical aspects of the problems thus   involved that the benefit of free and full exchange of information and of the integration of ideas between the operating staffs of mine,   smelter and factory can be employed to best advantage.  

Given reasonably stable conditions at home and in Australia   over the next few critical years, we can expect to see the gradual building up of our mining operations, harnessed to an expansion   of manufacturing operations, particularly in relation to the production   of zinc and ancillary products   in Australia. We have a   sure foundation on which to build, and will take every opportunity which comes our way of strengthening our present position, and   I feel we can justifiably look forward to the future with confidence.  

<!-- *JUMPS* -->

lead concentrates to the smelter at Port Pirie, smelting operations at that plant had to be closed down from mid-July until the end of August. Railage of zinc concentrates to the eastern seaboard  

was entirely suspended for the period of the strike. It was not until well into January of this year that the accumulations of lead concentrates, stacked during the strike, were transported to Port Pirie.

PERSONNEL

REPORTS ON OPERATIONS

THE ZINC

CORPORATION

LIMITED

Operations.—The ore from the corporation's mine milled during the year amounted to 488,830 tons, of which 430,401 tons were mined from the lead lode and 58,429 tons from the zinc lode. The average grade of the lead lode was 16.2 per cent. lead, 3.4 ounces silver, and 11.2 per cent. zinc, the grade of the zinc lode was 3.8 per cent. lead, 1.2 ounces silver, and 14.5 per cent. zinc, giving an average over-all grade of 15.0 per cent. lead, 3.1 ounces silver, and 11.6 per cent. zinc. Lead concentrates produced totalled 93,226   tons, containing 68,269 tons of recoverable lead and 1,435,442   ounces of silver. The zinc concentrates produced amounted to   96,090 tons of an average assay of 52.5 per cent. zinc.

Under the terms of the sale of ore agreement 10 per cent, of the above ore—namely, 48,883 tons of ore—were sold to New Broken Hill Consolidated Limited; the total deliveries under this agreement to the end of 1949 were   189,616 tons of ore.

The metallurgical section operated in an efficient manner. A   total of 663,980 tons—an increase of over 55,000 tons on last year's figure—was created in the Zinc Corporation Mill, 439,947 tons being for account of this corporation,   and 224,033 tons for New   Broken Hill Consolidated, including 175,150 tons mined by the  

company.

The results from development work continue to be satisfactory, and the blocked-out ore reserves at the end of the year amounted to 4,900,000 tons of lead lode and 450,000 tons of zinc lode with values respectively of 15.4 per cent. lead, 3.2 oz. silver, 10.7 per cent. zinc, and 6.9 per cent. lead, 1.4 oz. silver, 17.0 per cent. zinc. Notwithstanding the extraction of 493,040 tons during the year, the blocked-out ore reserves increased by 200,000 tons of lead lode and 40,000 tons of zinc lode; and the grades were maintained.

The upward trend in operating costs experienced since 1945 has continued due, in the main, to further increases in the basic wage and cost of supplies and freights.

Broken Hill was fortunate in being able to maintain mining operations at full scale throughout the strike in the Australian coal mines; the strike lasted from June 27 to August 15, 1949, and generally had a paralysing effect on   industry throughout the Commonwealth. Although the South Australian   railways were able to maintain   a small rate of delivery, of /*SKIPS*/

The year under review has again been free from any serious Industrial disturbances and no time was lost on production from this cause. A dispute occurred with the Building Trades Union in July, which lasted 10 days, but only affected constructional operations and a satisfactory settlement was soon reached.

The new industrial agreement, governing employment throughout

the Broken Hill field for the next three years, came into operation in 1949, and is operating .satisfactorily.

The accident rate, as compared with 1948, unfortunately shows a slight increase; a very intensive effort is being made to improve the accident rate and to seek fresh means of reducing to the utmost the situations where careless infringement of the company's rules   and regulations can possibly occur. Figures alone do not, this year, provide a reliable guide, owing to an alteration in the compensation legislation making any lost time rank for compensation, instead of providing compensation only if three or more days were lost, as

hitherto.

In the statement last year to the shareholders of the Zinc Corporation, reference was made to   the problem being encountered in securing the additional man-power required to meet the extension   programme. Up to 1949,   new recruits, though largely unskilled and requiring training as   miners, were just sufficient to maintain the programme. However, in the year under review   there has been a growing shortage and it is evident that the attainment of the objectives of both the   Zinc Corporation and New Broken Hill Consolidated Limited, over the next five years is dependent on augmenting the sources from which man-power may be available. To this end consideration   is being given jointly with representatives of the Workers' Industrial   Union of Australia to possible   modifications of the present   regulations which require a qualification of birth or a minimum   residential period within a defined area of Broken Hill as a condition of obtaining employment   through that Union on the line of lode. This regulation, which has been in force since 1922, can be said to have operated to the benefit of all engaged in the industry,   but it is to be hoped that modifications satisfactory to all interests   can now be agreed. Housing   is still also a vital problem and the company has recently contracted

for the erection of 50   houses, which, if necessary, will be increased, for sale to employees.

GENERAL

The transport facilities from Broken Hill, apart from the dislocation

during the Australian coal   strike in June last, showed some improvement in 1949, as compared with the previous .years. The long

term outlook will, however, continue to cause anxiety until a   substantial augmentation of the railway systems takes place.

During the year under review, the engineering department has made satisfactory progress with an extensive programme of constructional

work in spite of difficulties   ranging from shortages of materials and labour, to delayed deliveries  

of many items of equipment;   a large part of this programme   has comprised work for   New Broken Hill Consolidated and the Southern Power Corporation,

The installation of the fifth section in the mill has been completed   and this is now in operation.

The exploration department continues in active operation and once again the company records with appreciation the willing assistance of the officers of the Commonwealth   Bureau of Mineral   Resources and the several State Mine Departments.

IMPERIAL SMELTING

CORPORATION

LIMITED

Operations.—The products of Imperial Smelting Corporation Limited in 1949 included zinc metal, zinc alloy, zinc dust, zinc oxide, zinc sulphate, sulphuric acid, lithopone, cadmium metal, hydrofluoric acid, fluorine compounds, barytes, cuprinol timber   and fabric preservatives, arsenic metal, and vanadium catalyst.

Towards the end of 1948, owing to transport difficulties in Australia   and elsewhere, there had   been a shortage of zinc concentrates in Great Britain, and in   order to conserve stocks of raw materials the rate of zinc smelting had to be restricted. As a result, output of zinc metal in 1949 was lower than during the previous year. Fortunately the stocks of zinc concentrates were restored

and this permitted resumption of zinc smelting at normal rates towards the end of the period under   review. An increased zinc metal output for 1950 is anticipated.

The production of sulphuric acid was an all-time record, as this manufacture was not affected by the curtailed rate of zinc smelting, because the decreased consumption   of zinc concentrates was   counterbalanced by the use of additional quantities of brimstone.   The modernization of the acid plants at our Newport and Seaton Carew works was completed by   the installation of improved spent oxide burners and has yielded a satisfactory increase in output of sulphuric acid.  

The production of lithopone pigment was also a record and the   commissioning of additional manufacturing plant towards the end   of 1949 should lead to still higher outputs in the future.

The new anhydrous hydrofluoric acid plant, which commenced   operation in 1948, made   an important contribution to our expanding range of fluorine chemicals. Many of these materials

are still largely in the development  

stage and it is believed   that there will be a greatly increased demand for them in the   future. The essential raw material for these products is fluorspar and in order to ensure a supply of fluorspar of the requisite high quality, a mine was developed during 1949 in County Durham and a beneficiation plant installed at Nenthead. Progress has been made in modernizing our barytos

mines.

SALES  

Anticipating less Government

control of some of our manufactures, and to meet competition   not only from domestic producers but from rehabilitated European countries, the selling organization of the corporation was replanned. The demand for our products has been well maintained and our entire production during the year of zinc, cadmium, and sulphuric acid was sold at satisfactory prices. There is an increased demand for Mazak alloy for die casting and this business continues to grow satisfactorily.

The demand for Orr's zinc white lithopone pigment is considerably greater than our productive   capacity, but with the   additional plant now in operation it is hoped soon to satisfy the many customers. Notwithstanding the heavy home demand for our lithopone, strenuous efforts have been made to promote increased sales in hard currency areas and, with the benefit of devaluation, sales to Canada have been increased very considerably. The   sales of Fricker's zinc oxide have been satisfactory during the year. Sales of metallic arsenic were higher than in 1948 and there has been a satisfactory increase in the sales of vanadium catalyst, particularly for export.  

The results achieved by our wholly owned and partly owned subsidiaries are again satisfactory. Associated enterprises in which we have investments, British Titan Products Company Limited, Fisons Limited, Capper Pass and Son Limited, and the Wolverhampton Metal Company Limited,   have also again achieved good trading results.

RESEARCH AND DEVELOPMENT

Research and development has made considerable progress in the field of fluorine chemistry. Boron trifluoride, in the form of complexes, is available in ton lots,   while boron trifluoride gas is offered in experimental quantities of sufficient size to enable small scale plant trials to be carried out in operations ranging from organic condensations to special welding. Other compounds available in experimental lots are fluorsulphonic   acid and benzotrifluonde. A unit for elemental fluorine and production of metallic polyfluondes   and fluorcarbons was almost completed

during the year.  

Progress in metallurgical research and development has proceeded   steadily in our smelting and   alloying activities. Some of these are long-term in character but will have great influence on the corporation's activities in future years. Others constitute improvements and economies in production   operations of considerable   cumulative effect. It has not been possible to start construction of our new research buildings mentioned, in the previous report, but the necessary sanctions have recently been obtained.  

Valuable contracts have been maintained with universities and research institutions and with similar smelting and chemical industries at home and oversea.  

Personnel. — Manpower available, though not plentiful, was   better than in past years. During lhe year special attention has been paid to the selection and placing of personnel and to education and training. The Ministry of Labour and National Service course of "Training within Industry" was continued and, in addition, courses foe training in supervision have been conducted which have had a marked effect upon the skill of our foremen and on their appreciation of the responsible position they hold in our organization. Certain members of our   management have been selected for advanced training at the administrative staff college and universities,   while others have been   encouraged to take part-time

studies.

It is a pleasure to record that we have again received the fullest encouragement and assistance from all Government departments concerned with our industry, both regionally and in London.

SULPHIDE

CORPORATION

LIMITED

The trading results of this company were adversely affected by   the suspension of operations from June 20 to August 15, owing to the coal strike, by the attempt to overcome substantial arrears of maintenance work, by transport deficiencies, and by delays in adjustment of the control prices of   products to meet increased costs of raw materials, etc.

During the year senior technical officials from the Imperial Smelting Corporation staff were engaged   in a close study of all the   operations carried out on the site and progress has been made on the investigations and planning of site developments in relation to the ultimate objective of establishing a zinc smelter on this site with a consequent expansion in production of sulphuric acid and superphosphate.  

Digitisation generously supported by
Vincent Fairfax Family Foundation
Digitisation generously supported by

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