The production of zinc around the globe is expected to experience volatility throughout the year as geopolitical factors impact the supply chain. In April 2020, the coronavirus pandemic caused the demand for zinc to decline significantly, as zinc-intensive sectors such as transportation and construction significantly slowed or shut down entirely. Zinc prices fell that month, with worries of a supply surplus and risk-off sentiment also reducing investor interest in the metal greatly. However, the supply surplus turned into a supply shortfall of 1 million tons in 2021 as demand began to increase.
This recovery proved to be short lived as global zinc production reduced by 1.2% to 12.8 million tons the following year. Declining output from major zinc producers Australia and Peru was to blame for the reduced production in 2022, with the combined output from both nations reducing from 2.8 million tons in 2021 to 2.7 million tons last year.
In detail, zinc production in Peru saw a 4.8 year-over-year reduction due to conflicts between locals and mining companies that paralyzed mining operations in key places, such as Atacocha, Cuajone, and Yauricocha. Additionally, a mudslide incident at the Yauricocha mine during the third quarter of 2022 prevented production for 20 full days. Canada also saw its zinc output decrease by 12.4%, Russian zinc production fell by 4.9% and zinc production in China reduced by 0.3%.
However, increased production from India, Mexico and the United States balanced out the decline in production from these nations and brought production up from 2.2 million tons in 2021 to 2.3 million tons in 2022. In addition, several Mexican mines, including Fresnillo, San Rafael, Sabina, and Juanicipio, had recoveries that contributed to the increase in Mexico’s zinc output. India’s Kayad, Zawar, Khurd, Rajpura Dariba and America’s Red Dog mine contributed to 2022’s global zinc output.
Experts predict worldwide zinc production will recover in 2023 and increase by 2.0% from last year. Mexico, China, Brazil, India and other nations are expected to contribute to the increase in global zinc production, with the commissioning of the Aripuana Zinc project and the Buenavista Zinc project in Brazil and Mexico, respectively contributing to the production growth.
The two new mining projects are expected to have an annual combined production capacity of 161.6 kilotons.
Zinc production is predicted to grow at a compound annual growth rate (CAGR) of 0.5% from 2023 to 2026, with mining slowdowns and closures in Peru, China, Bolivia and Kazakhstan dampening projections.
Zinc exploration companies such as Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are likely to look at these forecasts and adjust their strategic plans in order to benefit fully from the positive outlook for the global commodities market.
NOTE TO INVESTORS: The latest news and updates relating to Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are available in the company’s newsroom at https://ibn.fm/AZMCF
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