Zinc prices will hold up better than most commodities, according to Vedanta Resources Plc Chief Executive Officer Tom Albanese, who is developing a mine in South Africa.
Vedanta, founded by Indian billionaire Anil Agarwal, is developing a $630 million zinc project at the company’s Gamsberg deposit near South Africa’s northern border with Namibia. The metal has dropped 11 percent this year to $1,933 a metric ton on the London Metal Exchange.
“The one bright spot in that weakness of commodities has generally been zinc,” Albanese said by phone Monday. “We’re not being euphoric in this environment, the first stage of the Gamsberg development is quite modest.”
While zinc has slumped this year, it’s done better than most other industrial metals as China, the biggest commodities user, expands at the slowest pace since 1990. Major zinc-mine depletions may more than offset additional supply as soon as 2016, Sean Gilmartin and Kenneth Hoffman, analysts at Bloomberg Industries, wrote in a July 16 note.
Zinc inventories tracked by the London Metal Exchange fell 36 percent this year to 443,350 tons, heading for the biggest annual decline since 2006.
“We are cautious about the commodity sector in general, although we see in the long term that again there is still an enormous market for those products we produce,” Albanese said.