RPT-COLUMN-Zinc’s infinitely stretchable deficit deadline – by Andy Home (Reuters U.S. – June 12, 2015)


(Reuters) – All mining activities at the giant Century zinc mine in Australia will have ceased by the end of this month.

News that will be greeted with relief by believers in the zinc deficit story, who have had to watch Century’s operator MMG push back the fateful closure date many times in the past.

Century has become totemic of zinc’s bull narrative of looming shortfall as some of the world’s biggest mines come to the end of their natural lives without obvious like-for-like replacements.

The resulting raw materials crunch, the bull argument runs, will force prices up to a level needed to incentivise new supply.

It’s a tantalising prospect for a market that has seen only fleeting rallies based on the unreliable signals coming from stock movements on the London Metal Exchange (LME).

Right now the price for three-month delivery on the LME is trading just above $2,100 per tonne, bang in the middle of the broad $1,800-2,400 range in which zinc has been trapped for the last three years.

One day, zinc bulls hope, the price might recapture the dizzy heights of 2010, when the galvanising metal traded above $2,700, or even 2007, when it soared above $4,000 per tonne.

Century’s closure, it follows, will bring that day just a little bit closer.

Except that MMG has sprung a last little surprise on the market, pushing the day just a little bit further into the future.

Other producers have recently come up with bigger surprises, once again stretching what appears to be an infinitely flexible deficit timeline.


Mining activities may be stopping at Century this month but the mill will continue operating into the third quarter, processing stockpiled ore.

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