By James Wellstead—Exclusive to Zinc Investing News
The Spring Session of the International Lead and Zinc Study Group (ILZSG) was held this past Wednesday April 13th in Lisbon, Portugal. The ILZSG’s Standing Committee released its output and demand projections for 2011 with continued expected growth in both areas.
Though tempered by the uncertainty of events like the Japanese earthquake and the political transitions in the Middle East and North Africa, projections of supply are expected to rise by 9.1 percent to 13.44 million tonnes by year end. This expansion will be lead by the increases in new zinc mine capacity in Canada, Australia, Saudi Arabia, Uzbekistan, India and Tajikistan and by higher output from sources in China, Kazakhstan, Mexico, Russia and the United States, the press release stated.
These increases in supply are expected to be met by rising demand, driven primarily by China which last year consumed 59 percent more zinc than the U.S., Japan and Europe combined. China is expected to continue its increased consumption by 9.1 percent through the year, followed by increases of 6.6 percent in the U.S., 4.4 percent in the EU and 1.9 percent in Japan on the back of its reconstruction efforts. Total demand is projected at 13.4 million tonnes, slightly lower than expected supply increases, but still up 6.3 percent over the past year.
The global refined zinc market is expected to remain in a surplus for the fifth successive year, forecast at just under 200,000 tonnes.
Despite the growing prospects of expanding zinc production and consumption in the coming year, zinc prices remain sluggish on the London Metal Exchange (LME) in the face of ILZSG’s 2011 numbers, as the exchange fell between 0.4 percent and 1.9 percent. Lead and zinc were the worst performing prices, posting the biggest declines on the LME.
In yesterday’s trading session zinc futures touched a low of $108.95/lb USD after opening at $111.25/lb, and finally settling at $109.5/lb on the close.
Minmetals Resources (HKG:1208) has received much press lately in the wake of its purchase offering for Equinox Minerals Ltd., (TSX:EQN) (ASX:EQN) the Perth-based company listed on the Toronto Stock Exchange. With Equinox’s huge various holdings copper reserves—principally in Zambia—as the motivating force behind the acquisition bid, Minmetals remains a predominant producer of zinc, specifically the world’s second largest mine in Australia, the Century mine.
Minmetals seeks to diversify its assets, said a senior company official on Tuesday April 5, and these efforts have been bolstered by Chinese banks which have been said to offer financial support for Minmetals $6.5 billion USD offer for Equinox Minerals Ltd.
Despite this transition in emphasis, Minmetals CEO Andrew Michelmore said the company was continuing to pursue zinc holdings in 2011. This has become even more important in the wake of recent statements by company officials that their largest zinc mine, the Century zinc mine, is unlikely to extend the pre-arranged closure date it had set for mid-2015.
Elsewhere, Bloomberg.com reported that Mytilineos Holdings SA will decide in the coming weeks on its plans for the Copsa Mica zinc and lead smelter in Romania.
Investing in zinc? Zazu Metals Corporation (TSXV:ZAZ) holds a 50% interest in the Lik Project in Alaska, a joint venture with Teck Resources Limited. The PEA on Lik South estimates that 17.1Mt tonnes of ore milled at an average grade of 7.7% zinc, 2.6% lead and 47 g/t silver would come from the Lik South project.
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