Zinc may be headed for the $1.50/lb-mark by 2016, buoyed by an approaching supply bubble, mining analysts at Hallgarten & Company said in a research note.
The company said that since iit bottomed in 2008, zinc had rebounded to over $1/lb, only to slip back during May 2010 when the first wave of European economic woes surfaced, and then again on the recent global market weakness.
The metal seems to have found stability in a band of between 85c/lb and $1/lb.
“This relative stability is good but not much consolation to anyone in the space. This includes end-users. The zinc complex has needed a sustained recovery in prices to tease new projects off the drawing boards and into the financing phase,” the company said in a research note.
Analysts said there is no new significant production scheduled to come on line during the next three years, except for strong byproduct credits from silver and lead mines, while many significant zinc mines are scheduled for exhaustion by 2015. Mine closures are expected to result in a net loss of about 1.4-million tons of zinc over the next few years.
In Canada, the Xstrata-owned Brunswick and Perseverance mines are destined to close in 2013, after Brunswick mine had already been stretched beyond its original life-of-mine.
A shutdown of the two mines would remove a combined 350 000 t of yearly metal capacity.
To counter such closures there are new mines such as Glencore’s Perkoa project, in Burkina Faso, with a capacity to produce about 90 000 t/y and Talivivaara, in Finland, at just over 25 000 t/y.
“Mega-mines that lasted for decades, are, in modern times, being replaced by much smaller mines with more limited mine lives,” the analyst said.
Source: Creamer Media Reporter