Zinc has never been a popular or cool investment. It’s never been the ‘hot new commodity’ and there’s never been a time in recent years where investors have been scrambling to buy up as much zinc as they can.
Zinc has been flying under the radar for a long time…. so most investors have missed out on the fact that zinc has entered one of the strongest bull markets in history!
Take a look at the movement of the zinc spot price below: 
Right now as you are reading this, zinc prices have never been higher. But because zinc is ‘uncool,’ many investors are seriously missing out on this bull market. You don’t want to be one of them.
Let’s take a look at exactly why zinc prices have shot through the roof and why they’re probably only going to keep going up.
Reason #1: Mine Closures Have Led to a Severe Supply Shortage
Over the past few years, zinc mines have been closing at an unprecedented rate. In January 2016, Australia’s largest open-cut zinc mine, the Century Zinc Mine, shipped its final load. The mine had produced on average 475,000 tons of zinc annually.
On almost the same date as the last shipment from the Century Zinc Mine, the Lisheen mine in Tipperary, Ireland, also made its final shipment. The Lisheen mine produced an average of 300,000 tons of zinc every year.
Glencore, the world’s largest zinc producer, has also seen its production rates steadily declining. According to its 2016 production report, the company produced 1,444,800 tons of zinc in 2015; but only 1,094,100 tons in 2016. That’s a 24% decline or a decrease of over 350,000 tons! That’s actually less than what the company intended; in 2015 it announced that it actually planned to cut zinc production by 500,000 tons!
The closures from these three companies alone amount to over 1 million tons of annual zinc production taken off the market. Is that significant you ask? It really is, considering that global annual zinc production is only about 13.5 million tons.
Reason #2: China is Devouring Zinc, and It Needs More!
The industrial juggernaut that is China continues to demand more and more of the metal. In case you didn’t know, zinc’s primary use at the moment is in galvanizing steel to make it rust proof. It is estimated that over 40% of worldwide zinc production is used to satisfy Chinese demand; and that figure is likely to only increase.
China’s insatiable demand for zinc is primarily driven by its large scale infrastructure spending. You may not know this, but although China’s economy is still smaller compared to the United States, its infrastructure spending far outstrips its Western counterpart. Here are some figures to put things into perspective.
1. Over the past decade, China has spent $11 trillion on infrastructure projects. Contrast that with President Trump’s plan to spend a mere $1 trillion on American infrastructure over the next decade, which critics are already calling ‘too ambitious’.
2. According to McKinsey Research, China spends more on infrastructure than North America and Western Europe combined.
3. In mid-2016 China stated that it would invest $724 billion over the next three years in transport-related infrastructure alone.
4. Just recently, China unveiled its massive ‘Belts and Roads Initiative’, a vast network of railways and ports that it intends to be the ‘21st century Silk Road’. Here’s how ambitious it is, when completed the network will span an area that includes more than 60 countries and 4.4 billion people.
China expects to spend $1.3 trillion on this project over the next five years, a move that is expected to result in as much as 150 million tons of extra steel demand! And when steel demand goes up, so does the demand for zinc.
As you can see, with China’s gargantuan infrastructure spending machine showing no signs of slowing down or stopping, demand for zinc has never been higher. And that’s just China, don’t forget that as mentioned above, the Trump administration is also highly ambitious on future US infrastructure projects.
So what happens when you have strong demand but dwindling supply?
It’s no wonder then that since the beginning of 2016, zinc prices have kept climbing and climbing. The supply simply isn’t enough to meet the demand! If you need even more evidence, take a look at how zinc stocks have been dwindling to their lowest level in almost 10 years.
If you think the zinc shortage is severe now, well here’s some news for you; it may get EVEN WORSE in the future!
You see, while zinc is a strong ‘traditional’ play, driven by increasing steel demand, there is one FUTURE use of zinc that not many know about but is already causing the ears of many forward looking investors to perk up.
That use is Electric Vehicle Batteries.
Right now, most electric vehicle batteries are using lithium-ion batteries. This is purely due to technological limitations; if electric vehicle manufacturers had a choice, they would rather opt for safer and more stable batteries; one that doesn’t have the tendency to overheat and explode.
That’s why scientists around the world are furiously racing to develop new battery technologies that could potentially replace the dominance of lithium-ion batteries. One of these new battery technologies and the one that shows the most promise thus far, are zinc batteries.
One Californian startup is called EnZinc. It is developing rechargeable zinc-based batteries that could not only store as much energy as lithium-ion batteries, but could do so while being safer, cheaper, smaller, and lighter.
Here’s what EnZinc CEO Michael Burz has to say about the batteries his company is developing.
“We feel we can have a battery ready for the market by the end of 2019…. (they will) be 30 to 50 percent cheaper than comparable lithium-ion systems.”
EnZinc has partnered with the US Naval Research Laboratory in this endeavor, but while they’re the most prominent company, you can be sure they’re not the only one. The electric vehicle market is MASSIVE, and with lithium in short supply, viable rechargeable zinc batteries have the potential to turn an entire market on its head.
According to Bloomberg New Energy Finance, electric vehicles will make up 54% of new car sales by 2040. Transparency Market Research estimated that the global lithium-ion battery market was worth $30 billion in 2015 and would rise to $75 billion by 2024. What would happen if that entire market was replaced by zinc batteries?
What we are trying to tell you is this:
Zinc Demand Is Here To Stay!
Driven not only by increasing steel demand but for use in fertilizers, chemicals, and pharmaceuticals, zinc supply cannot keep up with demand. Global zinc demand for 2017 is expected to be 14.7 million tons versus a projected production of 13.8 million tons.
Sensing the opportunity, ZINC MINERS ARE SCRAMBLING TO FILL THE SUPPLY GAP!
