Zinc concentrate shortage could drive up zinc prices - Investec

A recent study published by Investec predicts a supply shortage of zinc concentrate over the next few months. According to Investec experts, this shortage of supply will lead to higher prices amid the closure of some mines.

In addition, Investec believes that the implementation of the Dugald River mines project and the proposed plans for further works will not be able to affect the current market conditions, as the development of the mine could take several years to start production. Zinc concentrate supply shortages are likely to drive up zinc prices over the next few months, Investec noted.

By the way, the Australian company MMG has approved an updated plan for the construction of a zinc mine worth $ 1.4 billion in northwest Queensland. The Dugald River Zinc Project, located 65 kilometers northwest of Cloncurry, will produce approximately 160,000 tonnes of zinc, plus by-products, over a design period of 28 years. This is much lower than the previously developed production manual of 200,000-220,000 tons. However, reducing the annual production targets for zinc concentrate will extend production by at least eight years. When commissioned, it will be one of the top 10 zinc mines in the world.

Construction of the rest of the infrastructure is expected to begin in the first half of 2016, and the first zinc concentrate exit from the mine is expected during the first half of 2018. According to Andrew Mikelmore, CEO of MMG, the Dugald River zinc project will be launched at a time when global supplies of zinc concentrate are forecast to be in dire shortage due to mine closures.

"Development of the Dugald River project has long been anticipated, but a significant shortage of zinc concentrate may already appear on the market in the next few months - a situation that in our view may affect the price of zinc," according to analysts from Investec.