By Paul Ploumis 30 Jul 2015 Last updated at 06:11:40 GMT
CANTERBURY (Scrap Monster): According to latest research note published by Investec, the global zinc market is likely to face concentrate shortfall in the coming months. This may push the prices higher, it adds.
Further, Investec believes that development of the Dugald River mine project has been long expected. The proposed mine plans would not be able to influence the current market conditions as it may take several years for the mine to start production. The deficit in concentrate supply would tend to push zinc prices higher over the next few months, it noted.
Incidentally, Australian MMG Limited has approved an updated plan for construction of $1.4 billion zinc mine in northwest Queensland. Located 65 kilometres north-west of Cloncurry, the Dugald River zinc project is expected to produce approximately 160,000 tonnes of zinc, plus by-products, over an estimated 28 year mine life. This is much lower when compared with earlier production guidance of 200,000 tonnes-220,000 tonnes. However, cut in annual production targets has extended the mine life by at least eight years. Once operational, it would be one among the top 10 zinc mines of the world.
The construction of the remaining infrastructure facilities is expected to commence by 2016. The first concentrate output from the mine is expected during first half of 2018. According to Andrew Michelmore, CEO, MMG, the Dugald River zinc project will come online at a time when global zinc supply is predicted to face acute shortage on account of closure of mines.
"The development of Dugald River has long been expected but a considerable deficit of concentrate could yet emerge in the market in the next few months -- a situation that in our view could lead to a squeeze on the zinc price," Investec said.