Zinc

[filament]

We should have a new topic for this commodity and companies to invest in which explore and mine this metal.

 

LME stocks are plummeting.

 

Copper has a value of over $3 pound and now has more inventory than Zinc which also has a lagging price of $1.80.

 

There is a lot more money to be made in this sector.

 

CBH is up from 45c to 70c in weeks.

 

Exciting time ahead !

[healyn]

In reply to: filament on Monday 30/10/06 09:17am

Have a gander at INL. Commenced producing zinc concentrate last week. No debt, resource life 20 years, 22.5% of BSM and a very nice price atm.

[filament]

In reply to: healyn on Monday 30/10/06 11:53am

SP looks to be about to breakout and targeting 20c.

 

Good suggestion !

[pukin]

Zinc stockpiles down 4800t on LME today... thats about 5%!!!!

 

We are now getting down to the stockpile levels we were around at the end of november when the Zinc price was above $2 a pound....

[herger]

Re: "there is a lot of money to be made in this sector" - I disagree.

 

I've done some research using google and my conclusion is that there is a real chance of catastrophe for the zinc price some time in the future.

 

Take a look at the 5-year zinc price, attached to the bottom of this post.

 

You'd have to ask yourself, would you buy zinc right now, after it's risen so much?

 

Keep in mind there's no cartel in zinc like there is for oil. There's no collective global zinc organisation to cut back supplies when supply exceeds demand. In such a situation the POZ will do what it has done for the 50 years, as producers have to compete or price or have customers go elsewhere.

 

There is an interview with the CEO of Zinifex on the website www.brr.com.au where he makes a comment along the lines of "when the price of zinc has decoupled from the marginal cost of production you know it's not sustainable", and the marginal cost of mine production is much lower than $2, $1, levels.

 

There's a common view in the markets that supply simply cannot catch up to demand, as demand grows at a quicker pace than supply. In such a situation I can see how the POZ can stay high or even go higher. But you can't ignore the possibility that supply will grow quicker than demand within the next five years. Based purely on historical data this is the most likely scenario. If you look at long term historical charts everytime there's a spike in the price of zinc, or for that matter most other metals such as copper as well, the price spike manages to create enough supply to bring the price back down to around the levels that preceded the spike.

 

[chart of historical prices obtained from this website: http://minerals.usgs.gov/minerals/pubs/com...zinc/720798.pdf]

 

Importantly the price spikes never lasted more than 5-10 years.

 

So based purely on a laymen's knowledge supplemented by information from google and internet searches I reckon there's also a "dark picture" along with the one we're told in the news frequently, about the "super cycle". http://www.sharescene.com/html/emoticons/sad.gif

[ricky99]

In reply to: herger on Friday 06/07/07 01:12pm

This is a hard one to resolve as you have to factor in each mine that is currently producing (esp the super mines) and what their production forecast is like, are they coming to the end of their natural life, moving on to lower grade ore etc and then you need to try to predict whether new mines will be bought on stream on the dates promised, at the capacity promised or whether they are likely to slip.

 

That starts to give you the supply side view, then you need to work out the demand side. What will slow it down, what influence will China and India etc have.

 

While I agree that the current prices will not last forever and everything longterm reverts to the mean - and average longrun profits a company in the near term (3 - 5 years) can still make very good money by looking in some of these prices via longterm hedges. In saying that though you do give away the chance of even higher prices unless you write hedges with open upside and a protected floor.

 

I'm only into Zinc in a small way via INL and BSM but have noticed that INL is now looking at hedges and for a small company like BSM current zinc prices are a once in a lifetime chance to get good early cashflows so that they can go and play the bigger game.

 

Also don't forget that a lot of these miners mine a mixture of metals zinc, lead, copper, silver and gold all in the same ore so do have some diversity in the mix

[billyrubin]

3 related factors need to be considered.

1. zinc usage is hinged to iron ore usage.

2. the start up costs of any new mine are very expensive and getting experienced labour appears to be near on impossible to acquire.so long lag times will continue to exist.

3. lead closely aligned to zinc mineralogy is making a sustained challenge for price parity.

 

[herger]

Good points both. I noticed especially some first hand commentary from someone in the mining industry, posted on SS itself - under off topic forum. The account certainly makes it sound like it's very serious, with no let up in sight.

 

Still perhaps it's my conservative self coming out, I'm still not comfortable with betting against history. There are many, many unknown factors out there related to supply and demand, which in my mind makes any forecast speculative.

 

Will be interesting to see how it all turns out!

[bongo67]

In reply to: herger on Sunday 08/07/07 07:13pm

One year on from those comments and zinc prices have plunged.

 

Current LME figures for use are :-

 

Industry %

Galvanising 47

Brass & bronze 19

Zinc alloying 14

Chemicals 9

Zinc semi-manufacturing 8

Misc 3

Total 100

 

That Misc figure of 3% may be due for revision with zinc supplementing lithium in Fuel cell use :-

 

http://www.platts.com/Metals/News/6915858....fined&undefined.

 

Zinc not so boring at all !!

 

 

 

 

[jahar]

In reply to: bongo67 on Saturday 28/06/08 12:14am

perhaps a new era in zinc; the technology has been evolving with the advent of increasing oil costs; also I hold OZ as part of my Zinifex and Oxiana share holding so I am a little biased (hopeful)

 

 

http://www.platts.com/Metals/News/6915858....fined&undefined

 

The power of zinc: Startup CEO talks zinc-based fuel cells

 

Washington (Platts)--26Jun2008

Robust supply and softer demand has transformed zinc from a hot to a

lukewarm commodity, but new technology that would make zinc the power running

cell phones and laptops -- and a significant distance down the road -- a fuel

source in hybrid cars, could help launch the base metal's comeback.

 

Power Air Corp., based in Livermore, California, announced this week it

had entered into a technology-sharing deal with Hawthorne, New Jersey-based

eVionyx to make zinc-based battery units called Powerpacks, that will give

extended-run capability to increasingly sophisticated -- and power-hungry --

mobile electronic devices like Blackberrys, MP3 players, and global

positioning systems.

 

"People don't know that zinc is a potential energy source," Power Air

President and CEO Donald Ceci, told Platts. "Eventually, if the world was

running on zinc, you'd have sustainable fuel." But, he added, "There's a lot

of development work to be done."

 

The technology is known as the zinc-air fuel cell, which gets its name

from the underlying chemical reaction that occurs when zinc pellets are mixed

with oxygen from the air, causing zinc oxidation. Lithium is the material

currently used in the batteries powering mobile electronic devices, but

deposits of the commodity are more scattered and scarce than zinc, and

increasingly pricey in the face of insatiable demand for the next big thing in

electronics, Ceci said.

 

"There's not that much lithium; you get it from salt lakes on the tops of

mountains in Chile and China." While those are not the only regions where the

material is found, he said, "There's certainly not enough to run the world's

hybrid electric vehicles." What's more, Ceci added, "Lithium is getting more

and more expensive because all the portable devices are running on lithium. So

zinc is developing into the next-generation alternative to lithium. We're

pioneering that to an extent."

 

Although the current crop of hybrid vehicles have fuel cells based on

lithium or hydrogen, the zinc-air fuel cell is safer and better for the

environment, he said. "The nice thing about zinc is, it's nonflammable and

nonexplosive and you end up with zinc oxide as a byproduct, which is totally

recyclable. You don't burn anything up into the atmosphere [so] there's no

emissions." Also, "of all the stable elements, zinc has the highest energy

density, so it is a very good power source," Ceci said.

 

These qualities could raise the base metal's profile as a fuel source and

drive up its price on the order of metallurgic coal -- the coal used to make

steel -- the price of which has soared on rocketing steel demand from China.

"Broadly speaking, I think this is a trend that going to grow not only in

North America and Europe, but around the world," Bart Melek, a commodities

analyst with BMO Capital Markets, told Platts. "Certainly with oil at

$135-138/barrel, we're going have to use other ways [to get power]."