• 4 minutes Trump will meet with executives in the energy industry to discuss the impact of COVID-19
  • 8 minutes Charts of COVID-19 Fatality Rate by Age and Sex
  • 11 minutes Why Trump Is Right to Re-Open the Economy
  • 13 minutes Its going to be an oil bloodbath
  • 5 mins Ten days ago Trump sent New York Hydroxychloroquine. Being administered to infected. Covid deaths dropped last few days. Fewer on ventilators. Hydroxychloroquine "Cause and Effect" ?
  • 4 hours US Shale Resilience: Oil Industry Experts Say Shale Will Rise Again
  • 18 hours While China was covering up Covid-19 it went on an international buying spree for ventilators and masks. From Jan 7th until the end of February China bought 2.2 Billion masks !
  • 9 hours Mr
  • 7 hours Free market or Freeloading off the work of others?
  • 7 hours China Takes Axe To Alternative Energy Funding, Slashing Subsidies For Solar And Wind
  • 8 hours Marine based energy generation
  • 20 hours What If ‘We’d Adopted A More Conventional Response To This Epidemic?’
  • 21 hours How to Create a Pandemic
  • 22 hours Apple to Bypass Internet and Beam Directly to Phones
  • 13 hours Which producers will shut in first?
  • 21 hours Real Death Toll In CCP Virus May Be 12X Official Toll

Breaking News:

WTI Slides On Huge Crude Inventory Build

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Here's a Critical Stat for Zinc

Very interesting data point on zinc last week. Courtesy of industry consultants CHR Metals.

These analysts calculated the average cost of zinc production across the mining industry. And came up with a conclusion that might surprise many observers.

Namely, that most zinc producers are still quite profitable. Even at today's lower prices.

CHR found that the average cash costs for producing zinc in 2013 amounted to $1,400 per tonne. Or about $0.63 per pound.

That leaves a fairly substantial margin for profit, at current zinc prices of $0.94 per pound.

This analysis flies in the face of conventional wisdom in the zinc market of late. Where many onlookers have been suggesting that low prices will create a shortage of metal. Especially in concert with planned closures of a number of depleted mines globally.

But cash costs alone may not tell the whole story. In order to start new mines, producers need more than just a recovery of their operating costs. They also require payback of capital invested in building new pits and processing facilities.

The bottom line could be that existing mines will solider on. But new projects will be harder to come by.

That indeed seems to be the message from at least one new zinc project: the Perkoa mine in Burkina Faso.

Perkoa was slated to become one of only a few operating zinc mines in Africa. But costs have been stacking up against the project. With its operator, GlencoreXstrata, officially suspending development work in February. Because of "unacceptable" financial results.

That shutdown led to news last week that Perkoa's junior partner, Blackthorn Resources, will permanently exit the project. With Glencore buying out Blackthorn's 27.3% interest for $12 million.

The price tag suggests neither party sees much upside in the project under current market conditions. Signalling that the current zinc price may simply not cover the "all-in" cost for bringing new production online.

It will be critical to watch the fates of other such development projects. To see which way supply (and prices) are headed here.

Here's to covering all the costs,

By Dave Forest


Download The Free Oilprice App Today

Back to homepage






Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News