Spain’s rich geology and favorable mining policies make for an ideal environment for zinc exploration, especially within the Iberian Pyrite Belt.
Gold may get all the glory in the metals markets, but as the fourth most widely consumed metal in the world, zinc is a commodity that investors should be aware of.
The rising demand for modern infrastructure development around the world has the potential to drive zinc production and new exploration projects. In China, the world’s leader in zinc production, the resource has become critical to the country’s ambitious infrastructure projects like the Belt and Road Initiative.
As nations continue to modernize through advancements in infrastructure, explorers have continued to seek out new zinc deposits. In Europe, Spain’s mineral-rich southern region is attracting mineral companies wishing to explore for zinc resources in a stable socio-political mining jurisdiction.
Zinc market and global infrastructure
Zinc is an important ingredient in the manufacturing of many everyday materials, from rubber and paints to cosmetics and pharmaceuticals. Alloyed to copper and other metals, zinc is found in electrical components and household fixtures. The silvery-white metal’s strong anti-corrosive properties and ability to bond well with other metals makes it an essential component for galvanized steel, which is why half of all global zinc consumption is used in the production of vehicles and critical infrastructure. Not surprisingly, the long-term outlook for zinc is strongly tied to infrastructure demand. According to the World Economic Forum, global investment in infrastructure is expected to reach US$79 trillion by 2040.
While Asian economies such as China and India have witnessed the most infrastructure growth in recent years, Europe’s construction industry is expected to pick up in the near-term, reports Research and Markets analysts. “Electricity and power infrastructure will be one of the fastest sectors in Europe as countries across Europe reaffirmed their commitment to advance the implementation of the Paris Agreement and intensify their cooperation on climate change and clean energy. Railway infrastructure will also positively affect the forecast,” stated the news release for the firm’s “Global Infrastructure Outlook to 2023” report.
Spain: Potential new supply for zinc market
One of Europe’s largest zinc smelters, and in fact one of the largest zinc smelters in the world, is the San Juan de Nieva smelter in Spain. Located on the northern coast of Spain, the smelter is operated by Glencore (LSE:GLEN) subsidiary Asturiana de Zinc and has an annual production capacity of 486,000 tonnes slab zinc.
Spain is one of the most mineral-rich countries in western Europe, especially in the south where the Iberian Pyrite Belt (IPB) has given rise to one of the largest concentrations of volcanic-hosted massive sulfide (VMS) deposits on the planet. VMS deposits are known to be long-term producers containing sizeable amounts of copper, zinc, gold and silver. The region hosts many supergiant deposits including the Rio Tinto VMS deposit which gave rise to mining giant Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO). Spain is also home to the Aguas Tenidas copper-lead-zinc mine, one of the largest base metals projects in Europe. Brought into production by Iberian Minerals, the mine was purchased by Trafigura Group in 2012 for C$995.6 million.
“Spain is one of the best mining jurisdictions in Western Europe. The rich geology of the southern region of Spain has given rise to more than 1,000 known mineral deposits. The country’s transparent mining policies, fiscal incentives to promote mining and exploration, well-developed infrastructure and skilled workforce have attracted a new wave of international mineral exploration companies in recent years,” Norman Brewster, CEO of Merida Minerals, told the Investing News Network. A professional geologist and veteran mining industry exec, Brewster was one of the founders of Iberian Minerals and instrumental in bringing the Aguas Tenidas mine into production.
Merida Minerals is developing the newly acquired Puebla de la Reina (PBR) project in the historic mining district of Extremadura in southern Spain. First discovered by Spain’s National Institute of Mining and Geology in 1981, the PBR project hosts a copper-zinc-lead VMS deposit with an extensive historical exploration database generated by global stainless steel producer Outokumpu between 1999 and 2001 that includes a historic resource base.
“Merida believes that current commodity supply, metal prices, grade, and technological advances since the 1990s make PBR an attractive exploration and development project. We plan to leverage this historical database as we further develop the PBR project in an upcoming property-wide exploration program in 2020,” said Brewster.
Pan Global Resources (TSXV:PGZ) is similarly targeting copper, zinc and gold at its Escacena VMS project in southern Spain. The company is actively exploring two mineralized zones on the property, including the La Romana massive sulfide copper deposit and the Cañada Honda gravity target which hosts a large lead and zinc anomaly.
Zinc’s necessary role in the development of the world’s infrastructure projects has easily made it one of the most important metals in the commodities markets. China’s ambitious infrastructure goals are expected to require significant amounts of zinc, which could put pressure on global sources of supply. Based on its history as a productive mining jurisdiction, Spain’s IPB region has the potential to supply zinc to infrastructure projects within Europe and around the world.
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