You have to keep in mind the relative size of the markets for these metals. Global demand for zinc last year was over 11,000 tonnes, over 8 times the demand for nickel and about 60 times the demand for moly. Because of the much bigger size of the market, of course zinc will be more common and it will be easier to bring zinc deposits into production.
However, the pipeline relative to the size of the market is much smaller, especially considering that LME zinc inventories had a supply deficit of over 300,000 tonnes last year vs. about 30,000 tonnes for nickel (there are no LME moly inventories and no futures for moly). Any new zinc mine production will have to offset this deficit, mine depletions, and growth in demand. That's a huge amount of new zinc supply that's required just to avoid depletion of zinc inventories. That supply just isn't there in the pipeline.
I mentioned earlier that there are a number of huge projects in the pipeline for moly. Nickel also has a few relatively huge projects in the pipeline, with CVRD's Voisey's Bay and Goro mines each expected to supply about 4% of global demand, much more than last year's LME supply deficit. By contrast, there are no zinc projects in the pipeline expected to supply even 2% of global demand. Nickel's been in crisis mode recently because of the almost nil inventory available, and I think zinc will be heading to the same type of crisis pretty soon as the remaining inventory dwindles away.
The reason MMG has been weak recently, as has been discussed on this thread and the MMG thread, is not because there is going to be excess zinc supply, but rather primarily because of the unlocking of millions of shares from last year's private placement. |
