Macquarie are now forecasting another concentrate deficit moving...

Macquarie are now forecasting another concentrate deficit moving into 2010 due to increasing demand and possible mine closures.

Its worth thinking of the timing dynamics for Aim if the zinc market pans out this way.

First of all the reputed plant start-up(finance willing)is mid 09.I would say it will be at least the end of 09 before full production is attained.Its got to be at least 12 months before the plant will be operational from the start of construction which puts start-up mid 09,then another 6 months to full production.Suddenly we're into 2010 and getting within reach of some significant mine closures.

I suppose the big question being will the offtakers/smelters see post 2010 period as a problem for them in terms of concentrate supply.

This potential concentrate supply deficit then becomes a pretty big factor for any offtake contract being negotiated in the near to medium future.

Another factor for the zinc market will be if they see this deficit become a real possibility one can almost be certain major end users of zinc will start to stock pile metal themselves and this should be reflected in a big rise in cancelled warrants on the LME.We have seen a slight tick up in cancelled warrants as of late.But as I have said before I wont get too excited until we see 15,000t plus back into the cancelled warrant category.

One wonders if this is a factor in BC/VB keeping their finger off the offtake trigger as yet.

Of course one also has to reflect on the fact that the analysts have got it wrong many times over the last few years and this concentrate deficit may never occur.The ones that will really only know to any degree of certainty would be the offtakers as they are the ones that know where their concentrate has the potential to come from.

If theres a person that would have the industry connections in this regard surely it would be Billy the Cash,our current MD.

"Bill worked at a senior level for MIM Holdings Limited in Base Metals Marketing and for the Lisheen Mining Limited’s zinc and lead mine in Ireland, where his extensive experience of over 20 years, in sales and marketing of zinc, lead and copper concentrates and metals marketing, product logistics, feasibility studies was gained."

Now the only thing we need is for the lenders to believe what Maccas are saying re the zinc mining industry.

Just an addendum.

Its also interesting that Yukon has been snapped up so quickly.Does this say something about where the Yukon suitors think the zinc mine supply might be going in the medium to long term?

d.