Supply Deficit, Strong Demand Could Benefit $16.5 Billion in Zinc Mining Projects Worldwide

Researched by Industrial Info Resources (Sugar Land, Texas)--A speculative metals-buying binge has pushed prices for both zinc and lead up to their highest marks since the mining boom. Zinc prices recently reached a five-year high on the London Metal Exchange due to speculation, but also as a result of improving conditions in China that have buoyed demand for metals. Zinc prices are up more than 50% this year.

The industry has shut several zinc mines in recent years, which has had some impact on prices. In Glencore plc's (Baar, Switzerland) third-quarter production report, the company noted zinc production of 789,200 tonnes, which was down 30% on the comparable period, reflecting the volume reductions that were implemented mainly in Australia and Peru.

Glencore recently placed the Black Star and Lady Loretta zinc-lead ore mines in Australia on care and maintenance, taking 2.3 million and 1.3 million tons per year of ore out of the market, respectively. Also in Australia, MMG Limited (Southbank, Victoria) closed the 5.2 million-ton-per-year Century mine. In Ireland, Vedanta Resources plc (London, England) closed its Lisheen Zinc Mine, which produced 2.8 million tons.

Since the beginning of 2015, 18 lead-zinc ore mines have started operations, 15 of those being small producing mines in China. One mine started up in Canada and two in Spain. Trevali Mining Corporation (TSX:TV) (Vancouver, British Columbia) restarted the Caribou Mine in Bathurst, New Brunswick. In Spain, Minas de Aguas Tenidas SAU, a joint venture between Mubadala and Trafigura, has restarted the Sotiel Mine, and the new mine in Huelva Cueva de la Mora, which produces copper and zinc ore.

The strong zinc market has miners reevaluating projects to bring supply online. Globally, Industrial Info is tracking more than 175 zinc ore-mining projects, totaling about $16.5 billion, as part of the Global Mining Business Intelligence Platform.

Twenty six projects totaling $3 billion are under construction. This includes a $172 million project by Gansu Changba Nonferrous Metals Company Limited to expand an underground zinc-lead mine in Longnan, China. The project is expected to increase mine capacity up to 3 million tons per year by late 2018. Projects also are under construction in Australia, India, Indonesia, Ireland, Kazakhstan, Peru and South Africa.

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