The 2015 Metals Outlook Series: Silver, Zinc, Lead – by Cole Latimer (Australian Mining – December 2, 2014)

The market for base metals silver, lead, and zinc is finally seeing moderate action.

The period leading to the global financial crisis saw an explosion of growth, with the sector seeing a 30.9 per cent growth in revenue followed swiftly by a 56.2 per cent growth in revenues, creating a heady market.

However once the GFC hit the bottom swiftly fell out of the market, as prices retreated quickly, and inversely, to the rest of the mining sector.

A 13.2 per cent decline was chased by another period of plummeting revenue, with the sector recording a 43.5 per cent drop in revenue. It recovered briefly in 2010 before seeing another swift fall into negative territory in 2012 before the current lift into even pricing territory.

This, more than many real­ise, had a major effect on the Australian mining landscape as the nation is the largest lead exporter and one of the largest zinc concentrate exporters worldwide. So what lies ahead for the metals?

Much of it relies on the contin-ued weakness of the Australian dollar. IBISWorld research states that overall revenues and the price of the metals are “forecast to increase over the five years through 2018/19 due to the interplay of higher output, stronger US dollar prices for silver, lead, and zinc, and a weaker Australia dollar”.

According to Grant Thornton’s Brock Mackenzie, “silver is cur-rently sitting at a four year low, not too dissimilar to gold.”

“As it is used predominately in industrial applications more than some other metals it is closely tied to the economic conditions in Japan and Europe, so movement there is more likely to impact its trajectory.”

BNP Paribas’ David McCombe added that he expects base metals to rise slightly over the 2015 period, however when it comes to silver “it will be coming off slightly due to supply and demand issues, but it will see a marginal increase in the backend of 2016, and expect another increase in the 2018/19 period”.

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