AI
Sunday, October 28, 2012 9:32:08 AM
The zinc market is approaching a tipping point. Independent mining research firms across the globe are projecting a massive supply deficit for zinc in the coming years. The reason for this projected deficit is simple. Many of the world's largest zinc mines are permanently shutting down operations as the economic ore has run dry. Furthermore, there are very few new zinc mines being developed. Meanwhile, demand for zinc systematically continues to rise.
(image source: www.crugroup.com)
Lundin Mining's Galmoy Zinc Mine in Ireland has closure plans approved by regulatory authorities and remains on schedule to be shut down prior to the end of 2012. Xstrata's Brunswick Mine, the world's largest underground zinc mine, is scheduled for closure in 2013. The Century Mine in Australia, the country's largest open pit zinc mine, is scheduled to begin the closing process in 2013. The Lisheen Mine in Ireland, one of the largest producers of zinc concentrates in Europe, has an approved closure plan in place as well. These are just some of the major zinc mines scheduled for closure in the near-future, and account for a loss of roughly a million metric tons of zinc production annually. This loss of production will equate to nearly 10% of the entire world's annual zinc consumption.
The last time the zinc market entered a supply deficit, its price more than quadrupled from under $0.40 to over $2 a pound in less than two years. The deficit occurred from 2004 through 2006. Look at zinc's rapid price increase during that deficit period:
The projected zinc supply deficit in the near-future is expected to be more than twice as severe as the one in the mid 2000's. And given the lack of near-term production zinc projects in the world, the deficit could last much longer than the previous. Reuters reported that analysts believe the zinc market is heading for the tightest supply conditions in 30 years.
With global zinc demand growing 1-3% annually, and it being the fourth most consumed metal in the world, new zinc mines are desperately needed.
(image source: www.crugroup.com)
Lundin Mining's Galmoy Zinc Mine in Ireland has closure plans approved by regulatory authorities and remains on schedule to be shut down prior to the end of 2012. Xstrata's Brunswick Mine, the world's largest underground zinc mine, is scheduled for closure in 2013. The Century Mine in Australia, the country's largest open pit zinc mine, is scheduled to begin the closing process in 2013. The Lisheen Mine in Ireland, one of the largest producers of zinc concentrates in Europe, has an approved closure plan in place as well. These are just some of the major zinc mines scheduled for closure in the near-future, and account for a loss of roughly a million metric tons of zinc production annually. This loss of production will equate to nearly 10% of the entire world's annual zinc consumption.
The last time the zinc market entered a supply deficit, its price more than quadrupled from under $0.40 to over $2 a pound in less than two years. The deficit occurred from 2004 through 2006. Look at zinc's rapid price increase during that deficit period:
The projected zinc supply deficit in the near-future is expected to be more than twice as severe as the one in the mid 2000's. And given the lack of near-term production zinc projects in the world, the deficit could last much longer than the previous. Reuters reported that analysts believe the zinc market is heading for the tightest supply conditions in 30 years.
With global zinc demand growing 1-3% annually, and it being the fourth most consumed metal in the world, new zinc mines are desperately needed.
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