MMG - Very bullish on zincMMG is a subsidiary of the massive China Minmetals group....
lease find below, for your information, an article on the prospects of the zinc market.
Regards,
Canada Zinc Metals Corp.
TSX.V: CZX; Frankfurt: A0RAQJ
MMG CEO Andrew Michelmore is very bullish on zinc, in part resulting from the impending closure of his company’s Century mine.
LONDON (Mineweb) -
At the tail end of a very interesting East meets West seminar put together by Bloomberg in London during LME Week, Andrew Michelmore, the CEO of MMG (the Australian-based subsidiary of China’s Minmetals), talked about his company and in particular about the massive Las Bambas copper property it is building in the Peruvian Andes.
But perhaps his most interesting comments came in a Q&A session at the end with his remarks on the global zinc market.
Michelmore is bullish on copper, but VERY bullish on zinc, and he is in a good position to understand the market as MMG is the operator of the massive Century zinc mine in Australia which is due to cease production next year. Century will produces some 400 000 tonnes of zinc this year, around 7% of global mined supply and is reckoned to be the world’s second largest zinc mine after Hindustan Zinc’s Rampura Agucha in Rajasthan, India.
Century is due to run out of open pittable ore by the end of the current year, but can probably continue processing material until Q3 2015. Beyond that production will cease said Michelmore in an answer to a direct question on the Century closure schedule. And according to Michelmore – and virtually all the zinc analysts – there is no new mine coming on line that can replace this ore. There are some much smaller operations due to start-up, but the pipeline is being further slowed by the lack of availability of funding in the current financial markets.
Meanwhile zinc demand is continuing to grow. Michelmore reckons that about 80% of the western world’s automobile sector uses zinc galvanising for rust protection and, although European car production is relatively flat, US motor output is rising again.
And China presents a vast market as there only 20% of cars have zinc galvanisation, but resulting vehicle corrosion problems means that this proportion is rising fast through demand for cars that don’t fall apart after a few years. China is the world’s largest consumer of zinc, as it is for most metals minerals, and although its economy may have turned down it is still growing at 7%. While the government is no longer pushing growth at the rate it was, it is expected that the future growth rate (the new normal), unless government policy changes again, will likely be in the 5-7% range. Yes, it’s not the double digit growth rates seen in the past, but is still growth, and on a scale which is very large in relation to any other country given China’s massive industrial output levels.
And Chinese mined zinc production has been falling, and imports rising to compensate for the production shortfall and the growth in demand. Indeed production in a number of countries has been declining including, in particular, Canada which has seen Xstrata close the big Perseverance and Brunswick mines, and now there is the forthcoming closure of Century in Australia, all very significant zinc producers.
Zinc has had a reputation of being the ‘jam tomorrow’ metal in never quite reaching any bullish projections in price. Indeed many analysts have been sceptical about the bullish forecasts of some of their peers. Often quoted as being a dampener on price rises has been the high levels of zinc stocks, but it is notable that the stock position in LME warehouses, after peaking in late 2012 at an exceedingly high level of well over 1.2 million tonnes has been on the decline ever since and has now nearly halved having been run down to below 720,000 tonnes – and still falling.
Michelmore’s enthusiasm for the metal may thus well be justified.
About Canada Zinc Metals Corp. (TSX.V : CZX ; Frankfurt: A0RAQJ )
Canada Zinc Metals is a mineral exploration company focused on unlocking the potential of a future long life mining district in British Columbia, Canada. The Company is the dominant land holder in a world class mineral belt called the Kechika Trough which hosts in excess of 80 million tonnes of base metal resources.
Canada Zinc Metals owns a total of 77,855 hectares in 235 mineral claims which extend northwestward from the Akie property for a distance of 140 km.
The Company has outlined a NI 43-101 compliant mineral resource at its flagship Akie property, including an indicated resource of 12.7 million tonnes grading 8.4% zinc, 1.7% lead and 13.7 g/t silver (at a 5% zinc cut-off grade) and an inferred resource of 16.3 million tonnes grading 7.4% zinc, 1.3% lead and 11.6 g/t silver (at a 5% zinc cut-off grade). Using this estimate, the deposit contains 2.35 billion pounds of zinc, 471.8 million pounds of lead and 5.6 million ounces of silver in the indicated category, and 2.65 billion pounds of zinc, 482.2 million pounds of lead and 6.1 million ounces of silver in the inferred category (at 5% zinc cut-off). The deposit remains open in all directions.
Tongling Nonferrous Metals Group, Lundin Mining, Teck Resources and Korea Zinc are significant shareholders of the Company.
Teck Resources and Korea Zinc have also entered into an option agreement with Canada Zinc Metals in relation to 3 of the Company’s Kechika Regional Properties.