Global mined zinc production is expected to continue ramping up over the coming years as elevated prices encourage miners to restart idled capacity and start production at key new mines, Fitch Solutions Macro Research said this week.

In its ‘Outlook for Zinc Mining’, published on Tuesday, Fitch Solutions Macro Research said that, while some capacity had been taken off line during 2015 and 2016, owing to permanent mine closures, the return of some stalled capacity and new projects in key countries would drive growth over the coming quarters.

Fitch Solutions Macro Research forecast that global zinc mine production will increase by 1.6% year-on-year to 13.2-million tonnes this year, before increasing to 15.7-million tonnes by 2028, averaging 1.9% growth a year.

In one of the key markets, namely China, zinc production is anticipated to stagnate owing to ore grades and increasingly stringent environmental regulations. According to the outlook document, the conservation of minerals and increasing consolidation of mining industries outlined in China’s thirteenth five-year plan will weigh on the country’s zinc output.

Additionally, the strong support for State-owned enterprises (SOEs) in the plan will ensure that China’s zinc industry remains dominated by SOEs, with an increasing consolidation of smaller miners.

Zijn Mining will remain a dominant producer in China’s zinc sector, with ownership of China’s second-largest zinc mine, Wulagen, and its 95% ownership in the Miaog ou-Sanguikou operations.

Combined year-to-date production of 83 800 t through the second quarter is 3.7% lower than that of the same period last year.

Zijn is currently expanding operations at Wulagen, which will boost zinc mine production to about 125 000 t/y.

Fitch Solutions Macro Research forecasts that the country’s zinc production will edge higher, from 4.3-million tonnes this year to 4.4-million tonnes by 2028, averaging growth of 0.2% a year.

However, despite this muted growth rate, Fitch Solutions Macro Research said China was expected to remain the largest global producer of zinc by a wide margin and forecast that the country’s position would erode from 33% of global mine production in 2018, to 28% by 2028.

Australia, which is another key market for zinc, will see its zinc sector gradually recover as rising prices prompt miners to restart major operations.

Given the country's healthy pipeline of projects, Fitch Solutions Macro Research expects the country to have the second-fastest zinc production growth rate globally to 2028.

Fitch Solutions Macro Research forecasts that the country’s zinc production will increase from 940 000 t in 2018 to just over one-million tonnes by 2019, adding that this is supported by the fully operational Dugald river mine.

Zinc production in Australia is forecast to reach 1.3-million tonnes by 2028, averaging 3.4% year-on-year growth on the back of rising zinc prices and the solid project pipeline.

According to Fitch Solutions Macro Research, junior miners will continue to advance zinc projects in Australia, given the positive outlook for zinc prices over the coming years.

Australia's key new zinc project, the $1.4-billion Dugald river mine, began production in November 2017 and is on track to hit zinc production guidance of between 165 000 t and 175 000 t this year.

India, meanwhile, will increasingly drive global zinc production growth, as the country’s key miner, Hindustan Zinc, implements a large-scale expansion plan.

This commissioning of various projects is expected to continue throughout this year, allowing for mining production gains in both 2019 and 2020.

The solid pipeline of projects coming on line will boost zinc-led mine production capacity to 1.2-million tonnes in 2020. Fitch Solutions Macro Research maintains a solid production growth outlook for the country, forecasting zinc output to increase from 876 000 t in 2019 to 1.4-million tonnes by 2028.

Further, Peru’s zinc output is forecast to increase to just over two-million tonnes by 2028 from 1.6-million tonnes in 2018, averaging a yearly growth of 2.6%.

In the long run, the higher zinc prices will incentivise firms to move forward with projects within the pipeline, supporting further growth in Peru.

According to the outlook document, Peru has the highest number of new zinc projects – 13 – in the pipeline.