Appearance and elusive reality in China’s zinc mining sector – by Andy Home (Reuters U.S. – September 8, 2016)

LONDON – What could bring the zinc bull party to an untimely end? Well, obviously, there is the potential for Glencore to reactivate the 500,000 tonnes of mine capacity it has idled since late last year.

Given zinc’s stellar outperformance so far this year is predicated on a tightening raw materials market and the promise that this will feed through to metals shortage, the timing of any restarts will be a critical part of the equation.

Glencore, not surprisingly, is keeping its cards close to its chest. The other nagging concern for the many bulls out there is that Chinese mines will respond to higher prices by lifting production and filling any supply gap.

They appear to have already started doing so, figures from the International Lead and Zinc Study Group (ILZSG) suggesting national output rose by 6 percent in the first half of 2016 after falling by 3 percent last year.

But emphasis on the word “appear” in that sentence because when it comes to Chinese mine production, appearances can be very deceptive indeed. How, for example, to square apparently rising Chinese mine production with falling treatment terms, both within China and for imported mine concentrates?

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