Zinc Mining Consolidation - Shortage ForecastI know that for most traders that they don't look beyond the close at 4:00 p.m. , however here is an article that speaks to the looming shortage of zinc. I doubt we will ever get to mine this deposit with the current corporate structure.... it will be bought out long before that... Here is the Reuters article (apologies for any copyright infringement!)
TORONTO/BANGALORE, June 28 (Reuters) - Zinc producers are betting on higher prices in coming years, bringing a possible round of consolidation as miners jockey to reap the benefits.
Even though experts predict a surplus of zinc this year, they expect prices to rise within the next two years, and refiners, mid-sized miners and major producers are already looking for juniors to snap up.
"I think zinc is a 2013 story," Stifel Nicolaus analyst George Topping said of the price of zinc, which is used to galvanize metals and prevent rust. "But if you're an industry player you need to be in earlier. Beat the rush."
Names like Trevali Mining TV.TO, Tirex Resources TXX.V and even mid-tier producer Lundin Mining LUN.TO crop up as potential targets, given that some company valuations have fallen as zinc prices sag.
The metal is down more than 6 percent at $2,273 a tonne so far this year and well off the 2006 high over $4,500.
If there is a rush coming, Belgian producer Nyrstar NYR.BR is ahead of it. It bid C$663 million ($674 million), including a dividend, for Canadian miner Breakwater Resources BWR.TO last month and bought Farallon Mining late last year.
The Breakwater bid will push Nyrstar closer to its goal of mining at least 50 percent of the concentrate that feeds its smelters around the world and it has focused attention squarely on the long-stagnant zinc industry.
"Nyrstar has been buying smaller zinc deposits over the last two years, but the move on Breakwater brought their strategy to the market's attention," said Topping. "If they're buying you have to take note of that. They're the experts."
At first sight it's an odd time to buy up juniors, given that zinc stocks in LME warehouses are at their highest level since 1995 and the International Lead and Zinc Study Group expects global refined production to exceed demand for the fifth year running in 2011.