Zinc set for global gains from 2020

According to Mining News Pro - According to the latest report from Fitch Solutions, elevated zinc prices relative to historical levels will incentivise investment in new projects, expansions and restarts as the economics of the projects maintain their attractiveness, market analysts maintain.

Fitch also sees scope for some idled capacity to be restarted, and forecasts global zinc mine production to increase by 2.44% y-o-y in 2020 to 13.5mnt before increasing to 15.7mnt by 2028, averaging 1.97% y-o-y growth.

China will remain the largest global producer of zinc by a wide margin. China’s zinc production will stagnate due to declining ore grades and increasingly stringent environmental regulations, Fitch predicts. The report states the conservation of minerals and increasing consolidation of mining industries outlined in China’s 13th Five-Year Plan will weigh on zinc output in China.

Following 2019’s year of robust growth, Fitch analysts expect Australia to maintain its positive trajectory over the coming decade. Over 2019, the ramp-up of MMG’s Dugald River mine and the restart of Glencore’s Lady Lorreta mine at Mount Isa led the increase in Australia’s zinc mine output by an estimated 14% y-o-y.

Given Australia’s healthy pipeline of projects, Fitch expects the country to average the second-fastest growth rate globally to 2028. Analysts forecast the country’s zinc production to increase from 940.0kt in 2018 to 1.3mnt by 2028, averaging 3.6% growth y-o-y, on the back of elevated zinc prices and the solid project pipeline.

Junior miners will continue to advance zinc projects in Australia, Fitch forecasts, given the positive outlook for zinc prices over the coming years. Australia currently holds a combined 26 zinc related new projects, expansions and restarts in Fitch Solutions’ Global Mines Database.