The annual Prospectors and Developers Association of Canada conference (PDAC) opened its doors over the weekend to a crowd of 30,000 attendees. The annual event is the largest mining convention in Canada and attracts participants from 120 countries worldwide. On Sunday afternoon the conference kicked off with a session examining the outlook for the commodities which drive the mining industry.

Though one might have expected gold to take pole position in the discussions, zinc was the topic of the first presentation and Andy Roebuck, head of market research at Teck Metals, made a compelling and very bullish case for the metal. Though in 2011 zinc prices fell 74 per cent, edging out lead as the poorest performer, there has been a great deal of buzz in the halls at PDAC this year about zinc’s bright future. David Patterson, chairman of Donner Metals, predicted in his presentation that zinc will be in deficit by 2013. And Adam Ho of Zincore Metals made similar predictions, arguing that there hasn’t been enough investment in zinc over the last ten years. “In the coming years there is a pretty good chance of a supply and demand imbalance as far as zinc goes… there is a good chance we are going to see higher zinc prices”, he said.

In that context, Andy Roebuck began by highlighting a coming production shortage which has its roots in the 2008 financial crisis. In 2009, he said, zinc production fell dramatically and it has only recently recovered to pre-2008 levels. Between 2008 and now, exploration was largely neglected, but now many of the large zinc mines around the world are reaching the twilight hours of their mine lives. By 2015 Andy expects to see a million tonnes worth of closures.

To compound the bullish effects of short supply, Andy pointed out that 55 per cent of zinc is used in the production of galvanized steel, a product he expects Chinese car manufactures to begin using in larger quantities, as cars produced for the domestic market increase in quality. Today in China only four per cent of galvanized steel is used in the transportation industry, whereas in the United States the figure is closer to 30 per cent. Chinese manufactures have progressed along the continuum of steel grades and are now using great quantities of stainless steel. Andy believes that the next logical step will be galvanized. It’s that increased demand, along with shrinking supply, which is likely to put zinc into a deficit by 2013. Allowing for existing stockpiles, he predicts that by 2015 the supply will be unable to meet the demand.