If "It takes 10+ years to bring a sizable new project to production," for a zinc project, how come the experts figure the moly guys can get even bigger projects into production sooner.
It takes 10+ years to bring sizable new moly projects to production, too. Those moly projects I mentioned aren't new projects at all, with some of them already well over 10 years old. I mean new from discovery, not new from start of construction. It will take at least a couple more years for any of them to get to production, so I think moly can stay strong for a while longer. Several of those projects have already completed feasibility studies, though, so if they get financed, it won't be too long.
If companies go in with new technology and make a significant new zinc discovery, it will still take many years for them to go to production -- they can't go to production with a sizable deposit "very quickly" even with existing infrastructure. They have to drill extensively to prove out the deposits, do studies to prove feasibility, get financing and permitting, and do the required construction. Several smaller deposits with existing infrastructure might make it to production within a few years, but that wouldn't even put a dent in the sizable zinc supply deficit.
Again, you have to keep the relative size of the markets and the deficits in mind. There are a number of relatively small zinc projects going to production in coming years, many of them in Canada, but they've all been factored into the various analyst projections (often too optimistically), and the analysts still can't come up with enough supply to overcome the deficit and dwindling reserves and match the expected demand. While those projects would swamp demand in the much smaller nickel or moly markets, they won't come close to matching zinc demand any time soon.
Zinc skeptics point out all the small projects that plan to go to production and assume supply will overcome demand soon, but anybody who's done a detailed analysis of all the projects and the expected demand has concluded that there still isn't enough supply coming. Of course, if the price of zinc goes high enough to curtail demand, which seems the most likely scenario to avoid inventory depletion, whatever the supply will be will end up being enough at the resultant equilibrium price. Where that equilibrium price will be is the key question. |
