[ad_1]
The news comes in a zinc market where supply from the mine is already tight mainly due to restrictions to help slow the spread of Covid-19.
Benchmark zinc on the London Metal Exchange (LME) rose 2% to $ 2,743.50 a tonne as of 12:15 local time, after reaching $ 2,770, the highest since May 2019.
The news comes in a zinc market where supply from the mine is already tight mainly due to restrictions to help slow the spread of Covid-19.
Prices for the metal, which is used to galvanize steel, have risen more than 60% from a March low as industrial activity in China, the top consumer, rebounded from coronavirus shutdowns.
Benchmark zinc has been the best performer on the LME since early October, rebounding around 18% compared to copper’s 11%.
Colin Hamilton, a commodities analyst at BMO, says there is a dichotomy between a seemingly tight concentrate market and a well-stocked refined market.
“In many ways, this is a situation very similar to what was seen in 2016 after the depletion of the main mines, and after which the price of zinc doubled from low to high,” Hamilton wrote in a note to investors last week.
Even before Wednesday’s accident in Gamsberg, BMO was forecasting that the zinc concentrate market would remain in deficit until early 2021 at least. The length of such an undersupply, the bank said, would depend primarily on when excess refined market returns to the chain through lower smelter production.
“We have some growth in Chinese mine supply from new operations, but we believe that environmental pressures on existing mines will lead to continued depletion,” Hamilton said.
The Gamsberg mine opened in early 2019. VZI is the majority owner with a 69.6% stake, while Exxaro Resources has a 24.4% stake. The remaining 6% is in the hands of the Employee Participation Plan.
At full production capacity in phase 1, Gamsberg will produce 250,000 tonnes / year of zinc in concentrate, according to the VZI website.
Hidden Actions
The suspension of the Vedanta mine comes on the heels of news revealing that a buildup of hidden zinc stocks in Spain is partly to blame for the shortage in China and the ongoing price rally.
Inventories not held in exchange deposits have risen in several countries, but they stand out in Spain, where an important foundry operation is located, Reuters reported Wednesday.
Glencore (LON: GLEN), the owner of the San Juan de Nieva smelter in Spain, one of the largest in the world, declined to comment on whether it was accumulating zinc.
Watch Now: The World’s Top 10 Zinc Mines
[ad_2]
