zinc set to go sky high as supplies deplete, page-33

Zinc prices have remained soft for most part of the last few years, thanks to a continuous market surplus. But that all could change over the coming years as a number of major zinc mines are predicted shut down and cause a market shortage.

Major mines that are expected to close over the course of the next few years are:

-Century mine in Australia, currently producing 500,000 tonnes/year

-Brunswick mine in Canada, currently producing 220,000 tonnes/year

-Perseverance mine, currently producing 135,000 tonnes/year

In addition, several other mines all over the world are also expected to close down, thus causing a loss of around 1.5 million tonnes of market supply. This reduction in supply will possibly tilt the current market surplus into a shortage, thus boosting prices.

“There will be a significant number of large mines closing. On paper there seem to be sufficient projects to replace those closures; but there’s a rising risk that those projects come later than we are expecting”, The Financial Times quotes Duncan Hobbs of Macquarie who adds that he expects zinc prices to hit $3000/tonne over the next 3 years, up from the current price around $2000/tonne.

A Barclays Metals report notes that mine closures, declining ore grades and decreasing Chinese production will result in a “rapid tightening in metal supply and a period of much higher prices to develop in 2013 onwards”

Source: www.commodityonline.com