The third horse in this race is zinc and it is one that could well see some of the smaller diversifieds surprising at the finish line.
As RBC Capital Markets points out in a recent note, "Over the coming 3 years there is only one base metal for which we see structural change in the price profile and that is zinc. The degree to which we see pricing strength as both Century and Brunswick come off line is anyone's guess. However, the largest zinc producers globally have already started to reposition themselves. Vedanta has announced its restructuring to align its P&L and balance sheet. The proposed Glencore/Xstrata merger should also relevel the asset side of Glencore's balance sheet. Meanwhile Teck is directing its excess cash towards copper reinvestment while keeping an eye on its investment grade rating. The most interesting bit of all this is that none of the majors are investing significantly in zinc. Reinvestment in zinc is being left to some of the smaller zinc miners like Nyrstar."
Scotiabank'sPatricia Mohr is also a fan of zinc writing recently, "Zinc may represent the next big base metal play. Zinc will shift into ‘deficit' (at latest by 2014) due to ongoing demand growth in the face of significant global mine depletion in mid-decade."
"In 2013, the closure of the Brunswick mine in Canada, Century in Australia and Vedanta's Lisheen mine in Ireland will shift sentiment towards zinc, with prices rallying in anticipation of tightening supplies," she forecast. "In the second half of this decade, zinc demand will be boosted by a recovery in G7 construction activity, particularly in the USA, China could start to use more galvanized steel in the underbody of a car."
Of course there is no way to know which of these horses is likely to 'win' but with emerging markets like India and China continuing to change the course, it should be an interesting race.
About Canada Zinc Metals Corp. (TSX.V : CZX ; Frankfurt: A0RAQJ )
Canada Zinc Metals is a mineral exploration company focused on unlocking the potential of a future long life mining district in British Columbia, Canada. The Company is the dominant land holder in a world class mineral belt called the Kechika Trough which hosts in excess of 80 million tonnes of base metal resources.
Canada Zinc Metals owns a total of 77,855 hectares in 235 mineral claims which extend northwestward from the Akie property for a distance of 140 km.
The Company has outlined a NI 43-101 compliant mineral resource at its flagship Akie property, including an indicated resource of 12.7 million tonnes grading 8.4% zinc, 1.7% lead and 13.7 g/t silver (at a 5% zinc cut-off grade) and an inferred resource of 16.3 million tonnes grading 7.4% zinc, 1.3% lead and 11.6 g/t silver (at a 5% zinc cut-off grade). Using this estimate, the deposit contains 2.35 billion pounds of zinc, 471.8 million pounds of lead and 5.6 million ounces of silver in the indicated category, and 2.65 billion pounds of zinc, 482.2 million pounds of lead and 6.1 million ounces of silver in the inferred category (at 5% zinc cut-off).
The deposit remains open in all directions. Tongling Nonferrous Metals Group and Lundin Mining are significant shareholders of the Company.
Copyright © 2012 Canada Zinc Metals Corp
