Why Zinc?

  • Global zinc demand is growing at a steady pace with Chinese/Indian urbanization/infrastructure development. 
  • Zinc is a supply story, with an estimated 1.2 Mt in lost zinc production (>10% of total worldwide primary zinc production) through closures of mines such as Century, Lisheen and Skorpion between 2014 and 2020, with another 500 kt of temporary cuts by Glencore. 
  • LME stocks are down >780 kt over last 46 months, and the market is working though ‘off-market’ inventories. 
  • Between Wood Mackenzie and the CRU, estimated zinc metal deficits of ~500 kt per annum in 2016 and 2017. 
  • Few new viable zinc projects with any scale exist in the world, due to a lack of investment over decades. 
  • Benchmark zinc smelter treatment charges decreased significantly in 2016 and it is anticipated 2017 charges could continue the trend, strongly indicative of a tightening zinc concentrate market. 
  • Incentive pricing for new mine development has risen dramatically, with estimates now above US$1.50/lb Zn. 
  • There is real potential to relive US$2.00/lb Zn prices as seen in 2006/2007 for an extended period of time, with Wood Mackenzie forecasting a US$1.23/lb zinc long-term price.