Zinc boost fuels renewed interest in Australia’s largest zinc project
The price of zinc has held its gain above US$1,800t this week, after concerns that the latest mine closures by Switzerland-based Glencore could significantly curb output by 500,000t or four per cent of global supply. A 12% surge earlier in the week was the largest daily price movement for zinc in more than a decade as investors turned their attention to base metals following Glencore’s decision to reduce supply on Friday.
The zinc price slumped to its lowest in over five years at $US1,601/t late last month, partly owing to an overhang of inventories and although mining companies continue to grapple with challenging market conditions, the renewed interest in the steel making ingredient has provided a welcome boost in sentiment, particularly for those companies with development projects.
The price rise comes as ASX-listed Metalicity accelerates development of the Admiral Bay Zinc Project in the Canning Basin of Western Australia. Admiral Bay is one of the largest undeveloped zinc deposits in the world and is considered a strategic asset, given the value of the JORC resource is estimated in the order of $10 billion.
The project was acquired from failed zinc miner Kagara earlier this year, and although production may be some way off, Metalicity is one of few companies globally with the potential to deliver large scale, low cost zinc production capable of filling a supply gap left by the cessation of mining at Century in Mount Isa, Queensland.
Glencore’s latest supply cuts included mothballing the Lady Loretta mine near Mount Isa, further adding to zinc output shortages here in Australia. Metalicity is backed by Resource Capital Funds and is fully funded with more than $7m to undertake scoping studies for Admiral Bay and recently assembled a world class management team to oversee its development.
Commenting on development of Admiral Bay, Metalicity’s Managing Director Matt Gauci, said: “The development of Admiral Bay comes at a time of expected zinc supply shortage and Metalicity is well placed to advance development of the project, having secured funding and appointed a world class management team that is capable of developing this world class asset.”
The latest report by the International Lead and Zinc Study Group estimated a world zinc deficit next year.