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Zinc, Lead and Tin

Glencore Pivots From Disposals to Dividends as Stock Rallies – by Jesse Riseborough (Bloomberg News – November 29, 2016)

https://www.bloomberg.com/

What a difference a year makes. Glencore Plc fended off questions in 2015 about its survival as commodity prices hit new lows, and now there’s talk that the company’s turnaround plan has gone so well that it could be months away from paying dividends again. Surging coal and zinc prices, a rebounding stock price and shrinking debt pile made Glencore one of mining’s biggest success stories this year.

Chief Executive Officer Ivan Glasenberg, who will provide an update on corporate strategy on Thursday, spent the past year ticking off items outlined in a crisis-induced debt reduction plan, including a goal to sell $4 billion to $5 billion in assets. The market rewarded him for it, with the stock tripling in 2016 and clawing back almost all of last year’s losses.

Now, backed by a strong rebound in profits from its coal and zinc divisions, Glasenberg is in a position to pay back shareholders for supporting him through Glencore’s darkest days as a publicly traded company.

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Kidd doesn’t foresee extension of mine beyond 2022 – by Len Gillis (Timmins Daily Press – November 17, 2016)

http://www.timminspress.com/

TIMMINS – As much as the closure of the Kidd Mine will have an impact on the loss of assessment for the city hall treasury in Timmins, there will also be a dramatic impact on Kidd’s annual payroll in Timmins which is more than $100 million a year.

Some details of the closure plan for Glencore Kidd Operations in Timmins were revealed this week, ironically at a city council meeting where the company was honoured for the contributions it has made the community in the last half century.

“Exactly 50 years ago this week, in fact on the 16th of November, Kidd Creek officially went into production,” said Kidd Operations general manager Steve Badenhorst Monday night.

He said it has been a proud history for more than 20,000 past and present employees who have worked in one of the world’s best base metal deposits.

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2,000 jobs on cards at [Irish] Clare mine – by Andrew Hamilton (Irish Examiner – November 16, 2016)

http://www.irishexaminer.com/

Australian businessman Michael Hudson is heading a newly formed company which has just bought a site at Kilbrecken in Quin, near Ennis, from Canadian mining company Lundin. Extremely high-grade zinc has been discovered in deep veins at the site and indications are good that a major mining operation may be possible.

The new company, Hannan Ltd, will begin an assessment of the site immediately with exploratory drilling and non-invasive seismic tests due to begin in early 2017.

A small local team will be employed to undertake these assessments and it will be a number of years before full-scale mining could begin. If successful, the mine will operate fully underground with the zinc deposits running to at least 400m under the surface.

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Zinc and gold poised to break free of commodity slump – by Paul Brent (Globe and Mail – November 3, 2016)

http://www.theglobeandmail.com/

Seasoned investors know that commodity cycles are long and slow affairs that build up to a really great party that ends with a long, lingering hangover. Right now, for most commodities, we are in the hangover phase.

Plenty of culprits can be blamed for the pain. We face a mine overcapacity, as operations that were financed in the boom times are now up and running. An aging population in most of the developed world is responsible for slowing consumption. Developing economies have slowed, headlined by China, which has been increasingly counted on as a global engine.

Commodities usually get hammered in economic downtowns and, even in this tepid recovery of the past seven years, most are well off their prebubble peak prices. That means commodity watchers have to pick and choose more so than in boom times.

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Teck is best-performing Canadian stock in 7 years – by Eric Lam and Allison McNeely (Globe and Mail/Bloomberg – August 25, 2016)

http://www.theglobeandmail.com/

In a year where commodities producers have propelled Canadian stocks to the top of the developed world, Teck Resources Ltd. has been the biggest winner of them all.

The country’s largest diversified miner has risen five-fold on the S&P/TSX Composite Index to a market value of $16-billion this year, the biggest year-to-date gain of any stock since 2009. The company’s bonds are also the best-performing debt on the Bank of America Merrill Lynch U.S. High Yield Index, returning 104 per cent.

The shares rose 2.2 per cent to $28.11 at 9:36 a.m. in Toronto, the highest since January, 2014. A Teck representative didn’t immediately return a request for comment, outside the Vancouver-based company’s normal business hours.

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Mexico’s mining sector to reach $17.8bn by 2020 on the back of silver, zinc prices – by Cecilia Jamasmie (Mining.com – October 21, 2016)

http://www.mining.com/

Despite upbeat results from companies operating in the country, official data released early this year shows that silver output in Mexico, the world’s largest producer of the precious metal, has dropped over the past two years.

Like much of the rest of the world, the country’s mining industry saw very few new mines opening up in the period, marked by a sharp drop in commodity prices. Companies that were already operating, in turn, placed emphasis on cost-reduction and improving capital management.

But there are strong signs of wheels turning in Mexico’s mining industry thanks to the ongoing price rally experienced by many of the key metals the country mines —silver, gold and zinc.

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Japan’s Top Producer Says Zinc Could Surge to 5-Year High – by Masumi Suga and Ichiro Suzuki (Bloomberg News – October 17, 2016)

http://www.bloomberg.com/

Zinc, this year’s best performing metal, has the potential to extend gains to the highest level since 2011 because of a shortfall in ore production, assuming that Glencore Plc doesn’t restart idled mines, according to Japan’s biggest producer.

Prices could advance to $2,500 a metric ton by March because of “super tight” ore supply after companies cut output, Osamu Saito, general manager of Mitsui Mining & Smelting Co.’s metals sales group, said in an interview in Tokyo. “Even if Glencore ends production cuts, supply will continue to trail demand, though the feeling of shortage will ease somewhat.”

The company joins Goldman Sachs Group Inc., Deutsche Bank AG and Citigroup Inc. in highlighting the bullish outlook. Goldman Sachs predicts that zinc will reach $2,500 in three months, while Citigroup says it will average $2,445 in 2017.

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Zinc price slides, but is it a rewrite or a rewind of the bull story? – by Andy Home (Reuters U.S. – October 13, 2016)

http://www.reuters.com/

LONDON – It’s been a brutal couple of days for the zinc price. London Metal Exchange (LME) three-month metal slumped by $100 per tonne to $2,250 on Tuesday and the sell-off has extended to $2,210 today.

The five-year high of $2,418 achieved at the start of this month is starting to look a long way off, the slide coinciding with news of producers planning to increase output of mined metal. Given that zinc’s stellar run this year has been predicated on a tightness in raw material supply, does this amount to a rewrite of the galvanizing metal’s bull narrative?

Or is it nothing more than a technical rewind of over-exuberance? Tuesday’s price rout took place the day after two apparently bearish bits of news hit the wires. The first came from Abraham Chahuan, general manager of the Antamina mine in Peru. He told a news conference that the mine will likely double its zinc output to between 340,000 and 360,000 tonnes next year.

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Teck’s diversified business model poised to drive cash flow, profit as commodities rise – by Henry Lazenby (MiningWeekly.com – September 27, 2016)

http://www.miningweekly.com/

VANCOUVER (miningweekly.com) – Canada’s largest diversified miner Teck Resources is positioned to benefit from rising commodity prices owing to its exposure to stronger steelmaking coal and zinc markets, as well as from the weaker Canadian dollar.

VP of investor relations and strategic analysis Greg Waller told the Deutsche Bank twenty-fourth Annual Leveraged Finance Conference, in Phoenix, Arizona, on Tuesday that the improved direction in key commodity markets held significant upside for Teck’s core profit, as measured by earnings before interest, taxes, depreciation and amortisation (Ebitda).

Every C$0.01 change in the exchange rate with the US greenback will result in a C$35-million adjustment in Teck’s Ebitda, while every $1/t change in the price of coking coal will impact Ebitda by C$31-million. Further, every $0.01/lb change in the price of copper and zinc will impact Ebitda by C$8-million and C$13-million, respectively.

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

http://www.reuters.com/

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.

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Zinc prices — One of the best performers in 2016, up more than 50% from 2015 lows – by Christopher Ecclestone (InvestorIntel.com – September 6, 2016)

http://investorintel.com/

The Great Zinc Drought might be said to be broken, but those calling the end of this protracted dry spell going back to 2006 have been proven foolish before. However, this time around the degradation of the zinc mining space through mine closures, lack of a pipeline of new projects (or even old mines to reopen) and virtually zero exploration since 2011 means that the landscape is not only parched it is veritably scorched earth.

Zinc fell from about $0.90 per lb in the late ’80s to $0.40 per lb in 1993, then spent the rest of the decade constricted to a range between $0.40 and $0.55.

After the Tech Crash in 2000, it sunk below $0.40 per lb until 2003 when it began to regain traction. In 2004-5 it broke out above what appeared to be a multi-year $0.50/lb resistance and within two years quadrupled. In late 2006 it broke above $2 per lb. Now it is threatening to challenge the $1.10 per lb “ceiling” which has held it back in recent years. A breakthrough would be a significant event.

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Think zinc: miners bet big on revival in key base metal market – by James Regan (Reuters U.S. – August 24, 2016)

http://www.reuters.com/

SYDNEY – Resource companies are racing to dig zinc mines, betting that markets for the metal used to rust-proof steel and protect noses from sunburn have finally turned after a decade in the doldrums.

A supply glut is evaporating as big zinc mines run dry, commodity analysts say, helping drive up prices by nearly half this year and triggering investments in new and long-dormant projects from Greenland to Africa.

“There is a sense of urgency that the zinc price will continue to appreciate in coming years and we want to start construction as soon as possible to take advantage of that,” said Simon Smith, finance manager of Heron Resources, which is spending A$190 million to return a landfill site in Australia to its former life as a zinc mine.

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Glencore ‘Vindicated’ on Zinc Mine Cuts, Morgan Stanley Says (Bloomberg News – August 22, 2016)

http://www.bloomberg.com/

Glencore Plc’s decision to cut zinc output to fight a rout in prices last year has been vindicated as the metal has rallied in 2016, according to Morgan Stanley, which held out the possibility that the commodity trader may order restarts.

“It turns out, cutting/waiting was a good plan,” Morgan Stanley said in a note, which contained the heading “Glencore, vindicated.” The metal “may be supported/lifted, if China’s steel-production rate remains at around 800 million tons per year into 2017.

Conversely, the most likely short-term price cap for zinc is the reactivation of Glencore’s dormant mining capability,” it said. Glencore is the biggest zinc miner.

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Zinc deficit looms, prices up, but output restarts unlikely – by Pratima Desai (Reuters U.K. – August 16, 2016)

http://uk.reuters.com/

LONDON, Aug 16 Zinc’s sharp rally and looming market deficit has fed speculation that major producers such as Glencore may reverse output cuts, but analysts caution that is unlikely to happen soon.

Only when stocks of concentrate and metal sink to levels where higher prices can be sustained will large producers look at restarting capacity, they say. Benchmark zinc on the London Metal Exchange has climbed nearly 60 percent from January’s multi-year lows to around $2,300 a tonne, its highest since May 2015.

Many zinc mines have been shut or mothballed over the past couple of years, but prices did not really take off until this year when deficit expectations intensified with the closure of the Century mine in Australia and Lisheen in Ireland.

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Mining News: Soaring zinc prices? – by Shane Lasley (North of 60: Mining News – August 14, 2016)

http://www.petroleumnews.com/

Shrinking supplies seems to overcome gravity of slowing base metals demand

Caught between an updraft caused by dwindling supply and the gravity of slowing growth in global demand, zinc prices seem to have reached a cruising altitude above US$1 per pound.

Recent closures of two large zinc mines – Century in Australia and Lisheen in Ireland – wiped out more than 600,000 metric tons of the world’s annual supply of the galvanizing metal.

Analysts expected these looming supply deficits to send zinc prices soaring well above US$1/lb. in 2015. While the metal did climb to US$1.10/lb. in May, lackluster global economic growth muting the demand for commodities in general instead dragged the price to seven-year lows.

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