Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

High prices of zinc relative to historical standards have led to new investment into a pipeline of fresh projects, expansions and mine restarts which will continue into 2021, according to Fitch Solutions. 

 

Zinc mine output that contracted by almost 10pc from 2013 is set to commence a multi-year uptrend beginning in 2021. Fitch forecasts mine production to grow at 1.8pc annually over the next eight years beginning 2021. In the previous decade, mine growth was around 0.2pc, annually. 

 

China

China’s zinc production will edge higher from 3.85mn mt in 2021 to approximately 3.87mn mt by 2029, according to Fitch. China’s share of global production will slide to 26pc by 2029 from 29pc in 2021. Despite this, China will maintain its position as the top producer of zinc, however, China’s mine production will stagnate over time on the back of declining ore grades and the strict environmental policies. Zijin Mining will be the dominant producer in China’s zinc industry, states Fitch.

 

Peru

Peru will maintain its position as the top zinc concentrate producer in the coming years, forecasts Fitch. Peru’s zinc industry will be dominated by Antamina and Nexa Resources’ operations of El Porvenir and Cerro Lindo. Antamina produced about 303,000mt in 2019 down about 25.8pc from 2018 levels, while Cerro Lindo produced 250,000mt and El Porvenir 97,000mt. 

 

Production at Antamina was halted mid-April to late May this year owing to the COVID-19 pandemic. Glencore however, reported a 4pc growth in zinc output in H1 2020 compared to the prior year. 

 

Owing to high zinc prices, Fitch notes that Tinka Resources is continuing drill programs to develop Ayawilca asset which is likely to continue into 2021 and production would commence in 2023. The project is likely to produce 140,000mt of zinc concentrates in its first year. Nexa Resource’s could also pick up the development of its Shalipayco project which was in pre-feasibility study phase during Q3 2020 but was put on hold amid the pandemic. 

 

Australia

Fitch predicts Australia’s zinc sector’s robust growth to continue over the next 10 years. Ramp up at MMG’s Dugald River mine and restart of Glencore’s Lady Loretta mine at Mount Isa, Australia led to increase in zinc mine output by 14pc from the year prior. New Century Resources will also deliver significantly to the growth trend on the back of firm ramp-ups in mines. Zinc output of New Century is up 28pc to 336,000mt in Q3 from the year prior. Fitch predicts the operation’s to produce 120,000-132,000mt annually. Australia’s zinc production will rise to 1.6mn mt by 2029 from 1.4mn mt in 2021, according to Fitch.

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