Is zinc a potential play for the future? Many analysts tend to agree that zinc inventories should start to get tight again towards the end of 2009 through to 2011 and potential beyond.
Due to the current low spot price for zinc and the bleak outlook over the next 12 months a lot of zinc miners are running in to difficulty as they are finding it extremely difficult to cover their costs of production. High costs miners such as Perilya and CBH are just a brief example of companies struggling at present.
This thread is aimed to discuss the future of zinc and zinc miners (does not have to be a pure zinc play). Some areas for discussion may include future demand and supply of the metal. In particular I’m curious to get a discussion going on current or future projects that people consider may have to be put on care or maintenance or delayed due to the low POZ &/or because of financing difficulties due to poor equity and debt markets. Also state the amount of lost zinc metal from the market that would or may potentially arise. Below are two major projects that fit such criteria and have been in the press in recent days:
Lennard Shelf Zinc Mine – Operated Xstrata and Tech Cominco have announced the closure of their JV Lennard Shelf Pilbara mine in Western Australia because it has become uneconomic to operate. Operations are expected to cease in August 2008. The mine produced around 42,000t p.a. Zn & 12,500t p.a. Ld.
Peroka Zinc Mine – Operated by AIM resources. Today announced that due to current zinc prices and difficulties in raising finance the company has had no choice but to suspend the development of the mine and place it on care and maintenance until conditions improve. The project was originally anticipated for first production in late 2008/early 2009 at a rate of approximately 70,000t p.a. Zn.
Could low cost miners such OZ Minerals, Kagara and Jabiru Metals which will easily be able to maintain mine profitability in a low zinc price environment potentially be able to take advantage of other company’s downfalls and in turn be well positioned for any favourable turn in the future price of zinc?