2016 SUSTAINABILITY REPORT
Lead Powers IndustryLead Batteries Start More Than 1 Billion Vehicles Around The World – From Cars That Transport Workers On Their Daily Commute To Commercial Trucks That Deliver Goods Around The World.

Lead Powers Industry

Lead batteries start more than 1 billion vehicles around the world – from cars that transport workers on their daily commute to commercial trucks that deliver goods around the world.

Lead’s Late Rebound

Lead-based batteries start nearly 1 billion vehicles every day. They also provide energy storage for mobile communications, data centers and emergency equipment, and help to move commercial products in warehouses across our country. Lead batteries are truly foundational to the energy needs of modern society. At the end of their life, lead batteries are the single most recycled consumer product, their lead metal and plastic cases recovered, recycled and reused for new batteries. Given the value of lead in modern society, tracking the changes to the global market is a daily function of Doe Run.

2016 was a fickle year for lead with the lead metal prices dipping to $0.73 per pound in January before making a late comeback toward the end of the year. The long-awaited lead rebound meant mining companies like Doe Run that had taken measures over the past two to three years to weather low lead prices could breathe a sigh of relief.

Looking Back

Lower lead metal prices seen particularly in 2015 and 2016 were driven by a cooling-off period in global economic growth brought on by loan defaults in Portugal, Spain and Greece, and a softening of the Chinese economy.

During the last decade, China’s double-digit economic growth spurred the global economy and the lead market. But in 2015 and 2016, China’s growth moderated to a more sustainable rate of 5 to 6 percent annual growth. As a result, we entered a period of oversupply in the global lead market.

“As a global business, the economies around the world impact our company,” said Steve Batts, vice president – Southeast Missouri Operations. “We adjusted our output to adapt to the market and enable us to operate sustainably.”

Doe Run was not the only company that adjusted its mine output. Several other large mines also curtailed production, including mines in Ireland and Australia. Globally, newly mined lead output declined 2.8 percent year-on-year and refined production (primary and secondary) increased by 2.7 percent.

Newly mined lead supplies about 45 percent of the global demand for lead. The remaining nearly 55 percent of refined lead is supplied from lead recycling. In 2014 and 2015, there was tightness in the scrap lead metal market, which supplies North American battery recyclers (secondary smelters). For battery recyclers like Doe Run, this meant increased costs for scrap lead and narrower margins. The closure of a secondary smelter in California in 2016 did not completely ease the tightness since the market is further complicated by exports of lead battery scrap.

Lead Demand on the Rise

Sustainable Energy Growth
The use of lead batteries in wind and solar energy storage, the expansion of cellular networks in developing countries, and hybrid electric vehicles represents growing demand for this versatile and recyclable metal.

Future demand for lead will be driven by growing demand for mobility in developing countries, greater electrification of vehicles and the rapid expansion of renewable energy storage around the globe. These technological changes – powered by lead batteries – have analysts forecasting global demand to grow by 2 percent year-over-year. After years of depressed prices because of an oversupply of lead, companies like Doe Run should benefit from increased demand, and analysts expect demand to outpace supply of newly mined lead ore by 2023. Anticipated new mine projects will be required to meet the demand.

Today, global lead demand remains driven largely by China. In 2016, vehicle production in China increased 14.5 percent year-over-year for a record production of 28 million vehicles. China also continues to expand its mobile network, adding on nearly 2 million new transmission stations in 2016. Each cellular base station uses more than a metric tonne of lead in standby batteries, which provide emergency power.

In the U.S., Ford Motor company’s 2016 decision to forego plans for an automotive assembly plant in Mexico and instead expand one of its Michigan plants, bodes well for Doe Run and the battery manufacturers we supply. Separately, the country’s largest battery producer, Johnson Controls Inc., also announced it will invest $245 million in new battery production in the U.S. and Mexico between 2016 and 2020.

“The use of lead in renewable energy storage (wind and solar), the expansion of cellular networks in developing countries, and hybrid electric vehicles represents growing demand for this versatile and recyclable metal.”

Jose Hansen, vice president sales and marketing

A Promising Future

Lead is the most recycled metal on the planet. In fact, more than 99 percent of lead batteries are recycled in North America and Europe primarily as a result of the closed-loop supply chain and the intrinsic value that spent lead batteries retain. Their lead can be recycled and returned to its main purpose infinitely. The plastic casings are also recycled and reused as are nearly all materials used to build this highly efficient and affordable energy storage device.

But not everyone agrees that the battery of the past will meet the needs of the future. Other battery chemistries using often more expensive metals (such as lithium, cobalt and rare earth minerals) are competing to be the preferred energy storage for electric vehicles, home emergency power, and other motive and stationary uses. In most cases, these other battery chemistries cannot be economically recycled when they are no longer suitable for their original use. For example, less than 1 percent of lithium is recycled. This creates a glut of spent or partially spent batteries (primarily lithium batteries) that are being stored in warehouses or refitted for other, temporary uses.

Conversely, affordable lead batteries are produced, recycled and manufactured over and over again. The industry is working to advance the understanding of this quiet workhorse and help establish industry standards for battery manufacturing and recycling, so that society can use and reuse its natural resources in the most economical fashion possible. Learn more about how batteries are made and recycled here.

Next-Generation Lead Batteries

Lead’s high density, durability in punishing climates and untapped energy potential are some of the reasons researchers are exploring next-generation lead-based batteries. Some of this research is taking place here in Missouri at Missouri University of Science and Technology (Missouri S&T) in Rolla.

“Missouri S&T is exploring the future of energy storage, electric grid stability and the application of renewable energy for a more sustainable energy future,” said Angie Rolufs, Director of the Center for Sustainability, Missouri S&T. “Doe Run participates in and supports this research through its membership on Missouri S&T’s Microgrid Consortium and its research projects, including the design, management and measurement of the efficacy of lead-based battery energy storage and deployment in a small, multi-use campus community.”

Around the world, the Advanced Lead Acid Battery Consortium (ALABC), of which Doe Run is a member, is researching methods to improve lead battery performance and lifespan for micro-hybrid vehicles and renewable energy storage. For example, recent ALABC vehicle demonstrations with Ford, Hyundai and Kia have shown that 48-volt lead batteries in micro-hybrid applications can result in fuel savings and carbon dioxide reductions of up to 16 percent. Advanced lead batteries are helping car manufacturers meet increasingly stringent standards for fuel consumption and emissions around the world.

The ALABC and its partners plan more than $4 million in research projects with universities, national laboratories and members from across the globe during its current program period.

“While the outlook for lead in the long term remains strong, fluctuations in metals pricing caused by social, political and economic influences are apt to continue to keep things interesting,” said Jose Hansen, vice president sales and marketing at Doe Run.

Doe Run’s business also is impacted by the global market for other metals found in its mines. Read more about the market performance and everyday uses of zinc here.

Researching Lead Battery Innovation

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Doe Run is part of the Advanced Lead Acid Battery Consortium, which conducts research and development to advance lead-based battery technologies, like this diesel electric car with a carbon-enhanced lead-based battery for hybrid electric vehicles.

Leading Industry Research in Missouri

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Missouri S&T’s Microgrid Consortium is using lead batteries in exploring the future of energy storage, electric grid stability and the application of renewable energy at its EcoVillage campus community.