While zinc demand in India has remained somewhat flat so far this year, analysts are hopeful that with the picking up of manufacturing activity in China, the uptake will increase, since China also is one of the largest importers of zinc.
Australia is one of the countries high on the exporters list to China. In July 2013, for example, zinc concentrate imports from Australia to China were 60,000 metric tons, down sharply from the 113,000 metric tons in June. But analysts are optimistic that demand would have picked up the pace in August.
There’s not been much happening in the world of zinc so far. Now, according to news reports coming in from India, Legacy Iron Ore Ltd, the Australian arm of iron ore miner National Mineral Development Corporation (NMDC), has signed an agreement with TNG Ltd of Australia to acquire its zinc-lead-silver project in the northern territory of the country. NMDC is the single-largest producer of iron ore in India.
The report in the Hindu Business Line said the Manbarrum tenements are actually three exploration licenses and two mineral authorities, spread over a combined area of about 407 square kilometres. These are wholly owned by TNG’s subsidiary, Tennant Creek Gold Pty Ltd.
News of the acquisition was first gleaned from a filing by Legacy with the Australian Stock Exchange. In that, the company declared that an initial cash payment of Aus $2 million would be made to TNG on completion of the due-diligence and no later than 90 days from the signing of the agreement. Once that stage was over, Aus $3 million in cash of Legacy shares would be paid on a deferred basis. Further, the due-diligence of 60 days can be extended by Legacy by paying a nominal fee for a further 30 days.
At the start of 2013, analysts had said that for zinc to show upward mobility, a lot would depend on India and China’s demand for the metal. The India story, for now, has been disrupted, and there’s some hope left in China.
According to Sharon Heng, managing director of Legacy Iron, the potential acquisition of the Manbarrum project would complement the company’s existing gold and base metal portfolio. It will also allow Legacy to look at a greater portfolio of assets to spin off in the future, according to Heng.
The acquisition, said Heng, would position his company in the major base metal and ferrous area and may also provide an interest in the Legune prospect and other base metal deposits in the region.
As anyone following zinc knows, its use is directly linked to the use of steel. The government of India expects zinc demand to touch 600,000 tons by the end of 2013, but if the India story does not pick up soon, that might just not happen.