RE: Zinc shortage article - do the math!If stocks of zinc are dropping by an average of 907 tonnes a day at the London Metals Exchange, this means the London Metals Exchange will run out of zinc in a little more than 6 months. This is much earlier than the article says. Now I am not saying this will really happen. Long before the last zinc disappears, the price of zinc will have to move up substantially in order to discourage demand so that supplies will be able to stabilize. Of course, this also means that the zinc byproduct credits within Capstone's production will also increase, and cause net production costs at Cozamin to move towards zero. Still another reason why Cozamin is - and will be - Capstone's "cash cow".
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The article again:
World zinc output will need to grow 22% on this year’s production estimate of 10.6 million tonnes to meet expected demand by 2010, according to zinc explorer, ASX listed Mount Burgess Mining NL.
The increased output will have to come from the net result of new mine start-ups, production upgrades and mine closures to fill the expected shortfall of 2.38 million tonnes according to Mount Burgess Chairman, Mr Nigel Forrester.
Addressing the Paydirt Media 2006 Africa Downunder Conference in Perth today, Mr Forrester – whose company is developing the Tsumkwe diamonds and base metals and the Kihabe base metals projects along the Namibia-Botswana border in Africa – said China would remain the driver for higher zinc production globally.
“If China increases consumption by an average 345,000 tonnes per annum to 4.8 million tonnes total by 2010, and the rest of the world increases consumption by a modest 2%, total world production within three years must reach 13 million tonnes.
“Stocks and output will be at critical levels by early in 2008.
“The decline has been evident over recent years with London Metals Exchange (LME) stocks of 780,000 tonnes in April 2004 dwindling 606,500 tonnes in just 27 months to173,500 tonnes by just a few weeks ago.”
Mr Forrester said this represented an average daily decrease of 728 tonnes per day over the 27 months – but worsening to 907 tonnes a day this year.