A Comprehensive Guide to Zinc Investing

Market landscape for zinc

Zinc is the 24th most abundant element in the Earth's crust and has been used by humans for millennia. Its unique properties, including its low melting point, malleability and resistance to corrosion, make it invaluable in various industrial applications. In nature, zinc is found primarily as zinc sulfide in mineral deposits.

It often occurs alongside other base metals like lead and copper. The metal's ability to form alloys and its electrochemical properties contribute to its significance in both traditional and emerging industries.

Estimated at 13.58 million metric tons in 2024, the global zinc market size is projected to reach 14.68 million metric tons by 2029, growing at a CAGR of greater than 1.5 percent between 2024 and 2029. A September 2024 report by the International Lead and Zinc Study Group is painting a similar picture, forecasting global demand for refined zinc to rise by 1.6 percent to 14.04 million metric tons in 2025.

The same report from the ILZSG anticipates a 1.4 percent decline in zinc production to 12.05 million metric tons in 2024, but expects supply to bounce back with a 6.6 percent jump in production to 12.86 million metric tons in 2025, “mainly influenced by a robust growth of 8.9 percent in the world, (except) China.” A 3.9 percent reduction in China’s refined zinc output is expected in 2024, amid weak demand and a dramatic plunge in processing fees.

Major zinc-producing countries include China, Australia, Peru and Canada. These nations play a crucial role in shaping the global supply landscape. The demand for zinc is closely tied to industrial activities, particularly in construction, automotive and infrastructure sectors.

With supply of refined zinc anticipated to slightly exceed demand in the near term, this delicate equilibrium can create opportunities for savvy investors who understand market dynamics and potential disruptions.

Traditional and emerging industrial applications

Zinc's traditional applications form the backbone of the mineral’s global demand. These include:

• Galvanization: The process of coating iron or steel with zinc to prevent rusting. This is the largest use of zinc, accounting for about half of the global zinc consumption.

• Alloys: Zinc is a key component in many alloys, including brass (copper and zinc) and nickel silver.

• Die casting: Zinc alloys are widely used in the automotive, electrical and hardware industries for producing complex shapes with high dimensional accuracy.

• Chemical compounds: Zinc oxide and zinc sulfate find applications in rubber manufacturing, agriculture and pharmaceuticals.

These established uses provide a stable foundation for zinc demand, making it a relatively resilient investment option.

While traditional uses remain strong, emerging applications for zinc are opening new avenues for zinc utilization and investment potential:

• Zinc-air batteries: These batteries offer high energy density and are being developed for both stationary energy storage and electric vehicles. Their potential to revolutionize energy storage could significantly boost zinc demand.

• 3D printing: Zinc alloys are finding applications in additive manufacturing, offering new possibilities in prototyping and small-scale production.

• Renewable energy: Zinc's corrosion-resistant properties make it valuable in offshore wind turbines and solar panel frameworks.

• Nanotechnology: Zinc oxide nanoparticles are being explored for use in sunscreens, electronics, and antimicrobial coatings.

These innovative applications could drive future demand and potentially influence zinc prices, creating new investment opportunities.

Zinc production and exploration

The zinc mining sector offers various investment options, from established producers to exploration companies with promising projects. One noteworthy player in the exploration space is Group Eleven Resources (TSXV:ZNG,OTC Pink:GRLVF).

Group Eleven focuses on advanced-stage zinc exploration in Ireland, a country with a rich mining history. The company's recent drilling efforts at the Ballywire discovery have revealed high-grade zinc-lead-silver mineralization spanning over 2.5 km, with notable grades of up to 40.8 percent zinc and 1,440 grams per ton silver. Such findings highlight the potential for significant zinc deposits in their exploration areas.

The company’s strategic relationship with mining giant Glencore (LSE:GLEN,OTC Pink:GLCNF) , which holds a 17.1 percent stake, serves as a validation worthy of investor attention.

In addition to Group Eleven and Glencore, other major players in the zinc space worth considering include: Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK), Vedanta (NSE:VEDL,BSE:500295), Hecla Mining Company (NYSE:HL) and Nexa Resources (NYSE:NEXA).

Investors should conduct thorough due diligence, considering factors such as resource estimates, production costs, and geopolitical risks when evaluating zinc mining stocks.

Why now is the best time to invest in zinc

Several factors make zinc an attractive investment proposition in the current market:

• Market growth: The global zinc market size was valued at US$20.02 billion in 2023, and is projected to grow from US$23.36 billion in 2024 to US$30.40 billion by 2032, showing a CAGR of 5.58 percent from 2024 to 2032. This robust growth outlook suggests long-term potential for zinc investments.

• Supply constraints: Disruptions in mine production and geopolitical factors affecting supply chains can create price volatility, offering opportunities for strategic investments.

• Technological advances: Emerging technologies, particularly in the battery sector, are expanding zinc applications, potentially creating new demand streams.

• Green energy transition: Zinc's role in renewable energy infrastructure and energy storage solutions aligns with global trends towards sustainability.

• Economic recovery: As global economies recover from recent challenges, increased industrial activity could drive zinc demand.

However, investors should remain aware of potential risks, including market cyclicality, environmental regulations affecting mining operations, and the impact of global economic shifts on commodity prices.

Key takeaway

Investing in zinc offers a unique opportunity to capitalize on both established industrial demand and emerging technological applications. The metal's critical role across diverse sectors, coupled with promising market growth projections, makes it an intriguing prospect for investors seeking exposure to the commodities market.

Zinc exploration and development companies, like Group Eleven Resources, with strategic assets in stable jurisdictions present a compelling investment option.

This INNSpired article is sponsored by Group Eleven Resources (TSXV:ZNG,OTC Pink:GRLVF). This INNSpired article provides information which was sourced by the Investing News Network (INN) and approved by Group Eleven Resourcesin order to help investors learn more about the company. Group Eleven Resources is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

This INNSpired article was written according to INN editorial standards to educate investors.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Group Eleven Resources and seek advice from a qualified investment advisor.