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PrintThe short to medium term price outlook for zinc is more compelling than for other base metals, according to the CEO of Vancouver-based Trevali Mining (TSX: TV), Mark Cruise.
"There's an awful lot of copper supply coming on in the next two or three years. Conversely, there haven't been any world-class zinc discoveries since the mid-1990s, so there are no new major zinc mines being built anywhere," Cruise told BNamericas.
"A lot of the big mines that were built in the 1970s are nearing exhaustion - there's about five or six that will close down by 2015 - so it looks like 10% of world supply is just going to disappear," he added.
"We also produce quite a lot of lead by-product. Lead markets are more or less in balance to slight deficit. Lead fundamentals are probably stronger than zinc in 2014," Cruise said.
Trevali is ramping-up production at its Santander zinc-lead-silver mine in Peru's Lima region and the company expects to declare commercial production before year-end, around two to three months earlier than anticipated.
PRICE OUTLOOK
Cruise believes zinc prices have a base at about US$0.85/lb and strengthening. "Wood McKenzie is modeling US$1.35/lb zinc in the next five-year period. I think everyone would agree that strengthening zinc is the most likely scenario," Cruise said.
Zinc closed Wednesday at US$0.86/lb cash on the London Metal Exchange. Lead closed at US$0.96/lb cash.
SUPPLY/DEMAND OUTLOOK
Global demand for refined zinc is expected to rise 4.8% to 12.9Mt this year and 5% to 13.5Mt in 2014, according to the Lisbon-based International Lead and Zinc Study Group (ILZSG).
Zinc mine production is expected to rise by 1.7% to 13.7Mt this year and 2% to 14.0Mt in 2014.Global refined zinc metal output is forecast to increase 3.4% to 13.0Mt in 2013 and 4.9% to 13.7Mt in 2014, ILZSG said in early October.
Global demand for refined lead is forecast to rise by 5% in 2013 to 11Mt and 4.6% to 11.5Mt in 2014, according to the group.
Global lead mine supply is estimated to grow 5.7% in 2013 and 4.2% in 2014 to 5.55Mt and 5.78Mt, respectively, while refined lead metal production is expected to increase by 4.7% to 11.0Mt this year and 4.2% to 11.5Mt in 2014.
Trevali's Santander has a processing plant with a nameplate design capacity of 2,000t/day. Total production is estimated at 8Mt during a 35 year mine life. Indicated and inferred resources total 534Mlb zinc, 174Mlb lead and 7.8Moz silver.
The full interview with Mark Cruise will be published in this week's Mining perspectives, for subscribers only.
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