Of all the materials currently utilized by humans, zinc is the one with the most versatility. It is an essential material in the production of skyscrapers, a vital nutriet to agricultural crops, and an increasingly important additive in medicines. While its use are diverse, the price of zinc is still highly coordinated to the construction industry, as its predominate application is for the galvanization of steel.
Without mixing some amount of zinc with the steel, buildings corrode easily when exposed to air and water. The zinc coating protects the iron/steel compound from the environment, allowing the life of the building to be increased by an additional 10-15 years. This process, known as galvanization, has become a vital process to the construction and automobile industry. Is it also a unique quality to the zinc molecule, making it irreplaceable in these markets.
While zinc might be the equivalent of Superman in the mining industry, sulfur dioxide is the equivalent of kryptonite. S02 ,which is a major particle emmited by diesel engines, significantly reduces the life of zinc. As many major countries in Europe and around the world develop stricter standards for sulfur dioxide emmissions, the longevity of zinc coated structures may increase even more.
Currently the major producers of zinc in the world are China, Australia, and Peru, with Canada and the United States being 4th and 5th respectively. However, the greatest variable in the supply side of the equation is one of the most politically unstable countries on the planet (no surprise there) : Iran. Iran currently houses the largest undeveloped zinc mine in the world, with the potential to overtake the Alaskan Red Dog mine as the planet’s largest producer. The company that owns this mine is currently traded on the pink sheets in the United States and will shortly be profiled on www.thecommodityinvestor.com. For those looking at a junior mining company with tremendous potential, this may be one worth looking into.
At the current time, however, The Commodity Investor remains bearish on the intermediate outlook for the price of zinc. With one housing industry insider recently stating the market has “fallen off a cliff,” the demand for construction materials is likely to decline in the near future. This could send zinc prices into a significant retreat over the next 12-18 months.