Zinc: Underrated Metal a Bullish Investment

By | May 15, 2017

Gold and silver will always have their champions. Metals such as iron and cobalt tend to draw public attention because of their fair share of controversies about the strengths and flaws concerning their uses. However, one base metal that will finally get its long overdue and much-deserved prominence is also one of the industrial world’s most underrated minerals: zinc. Analysts, financiers, and investors forecast that zinc will maintain its robust position and steadily rise in price to become one of the more bullish investments in the market.

Money Week points to its impressive record in 2016. Zinc started the year selling at 70 cents a pound and ended 2016 with a price of $1.17 a pound. That in itself speaks of a 60 percent growth. The trend shows no signs of slowing down and is expected to continue its rise in 2017.

Zinc, will always be needed in manufacturing and other production processes that provide essential support for construction sites and power utilities all over the world. It may be basic human nature to gawk at gold jewelry and silver rings, but the scarcity of zinc can halt the building of skyscrapers and jewelers’ shops that house the more “precious” items. Zinc coats and makes stronger galvanized steel which forms the foundation of bridges, tall edifices, roofs, and staircases. It is the crucial strand that ignites the power that flows into all kinds of batteries and it clads airplane exteriors to make their flight possible.

R&D Magazine names zinc as one of the crucial elements in an ongoing experiment that seeks to craft an electron-powered absorber that can be used to create new sources of energy.

The overall value of the zinc market in 2016 was $34 billion. Money Week re-emphasized that value by comparing it to the more glossy, so-called prestigious silver market which is worth $18 billion.

Another factor that makes zinc a sought-after base mineral, and that increases its value in the global market, is that demand is greater than supply. Moreover, demand for galvanized steel, which needs zinc at its core, is increasing all over the world. There is a huge possibility that the need for zinc might continue to soar if U.S. President Donald Trump makes good on his promise to boost government spending on infrastructure. In fact, The Hindu Business Line forecasts a 500,000-tonne zinc shortage in 2017.

China remains the leading producer of zinc, but one nation alone will not be enough to bridge the expected shortfall. The Astana Times points to Kazakhstan as one of the more promising sources; its mines produced more than 300,000 metric tons in 2016. Ninety percent of this output is exported to countries including Russia, Turkey, Ukraine, the Netherlands, and China.

Another potential source is found in British Columbia, Canada. Kootenay Zinc’s Sully project is located just 30 kilometres from one of the largest SEDEX Zn-Pb-Ag deposits in the world, known as the Sullivan mine. Kootenay Zinc Corp. (CSE: ZNK.CN OTCQB: KTNNF), is actively drilling their Sully property to determine if a Sullivan type deposit can be duplicated.

Given all these factors in its favour, shares in zinc miners are expected to put in a strong showing in the stock market. Zinc may not shine with the radiant royalty of gold or the sheen of silver, but it has been steady for the past 18 months. There exists solid support for zinc worldwide, as its value will only increase, as the supply continues to tighten.