Battery minerals, Commodities, Features

Exploring zinc, the unassuming green metal

zinc

Long used to galvanise steel, zinc is becoming more and more important in the green transition. We take a closer look at the commodity and spotlight its renewable energy future.

It may not attract the same fanfare as other battery metals such as lithium, nickel and cobalt, but zinc is proving to be an equally important commodity in the world’s net-zero pursuit.

While lithium-ion batteries are the most common rechargeable battery on the market and are serving a critical purpose in the global electric vehicle (EV) movement, zinc-ion batteries have entered the fray as a potential lithium-ion alternative.

Lithium-ion batteries are recognised for their high energy density, meaning the system can store a large proportion of energy in a small amount of mass. This is why they’ve become so popular in the EV market, where weight is an important consideration.

As technology progresses, zinc-ion batteries are also packing a punch, demonstrating competitive energy storage capabilities. They are also manufactured in a similar way to lithium-ion batteries, reducing the need for separate manufacturing facilities.

The safety of lithium-ion batteries has been questioned, given they contain flammable electrolytes and can ignite if exposed to high temperatures. By contrast, the zinc-ion alternative uses water as an electrolyte, making them an inherently safer option.

While lithium-ion batteries may remain the most popular rechargeable battery in the near-term, there are increasing concerns the supply of lithium raw materials is failing to keep up with demand. And this is being reflected in lithium prices. 

According to price reporting agency Benchmark Mineral Intelligence (BMI), as of July 22, the price for lithium carbonate was up 376 per cent year-on-year (YoY), with lithium hydroxide up 359 per cent YoY.

In Australia, the primary lithium resource is spodumene concentrate, which is converted by international customers into lithium carbonate or lithium hydroxide for batteries.

As lithium prices rise so too does the pressure to develop lithium-ion alternatives, and given the manufacturing infrastructure needed to create a zinc-ion battery is much the same, there’s a rising case for this emerging technology.

Despite the current squeeze, Fitch Solutions forecasts an uptick in zinc supply later this year.

The zinc-air battery is also proving itself as a potential lithium-ion alternative. Zinc-air batteries generate electricity through a chemical reaction between oxygen and zinc, and are recognised for their high energy density, and safety and environmental benefits. 

Stewart Dickson, managing director and chief executive officer of ASX-listed resources company Variscan Mines, told Australian Resources & Investment that there is another important application for the commodity.

“Zinc usage for solar energy is expected to double by 2040,” he said. “Only zinc coatings can offer the low-cost corrosion protection for solar panels that are required to have a working life of over 30 years to be economic.”

The demand for solar panels is only going to increase as the renewable energy transition further intensifies, and corrosion protection will remain a critical consideration as durability comes into question. This is where zinc holds the key.

Zinc has a bright future; however, Dickson believes there could also be supply concerns for this commodity, which has led to spiking prices.

“Inventories have reached extremely low levels as demand rises, while output of refined zinc has fallen dramatically largely due to high energy costs in Europe, which has led to refineries mothballing production,” he said.

“Zinc prices have risen substantially over the recent period. Having touched on multi-decade highs, some of its gains have been lost more recently due to concerns over a global slowdown. Our view is that this is a temporary pause as structural demand remains strong.”

Benchmark zinc on the London Metal Exchange reached a record high price of $US4896 ($7050) per tonne (t) on March 8. This was only a momentary jump, however, as the commodity traded above $US4000 ($5760)/t for all of April on the LME, something not seen since 2006 when a similar zinc deficit was experienced.

In early April, Fitch Solutions revised its 2022 zinc price forecast from $US2900 ($4176)/t up to $US3500 ($5040)/t citing the high energy prices in Europe. The commodity analyst echoed Dickson’s concerns about zinc production.

“Global refined zinc output remains pressured, as major producers Nyrstar and Glencore have announced production curtailments on the back of the energy crisis in Europe,” Fitch said in its report. 

“Most recently, in March 2022, Nyrstar restarted the Auby zinc smelter in France, but stressed that high electricity prices still hindered the smelter’s full production, and the restart of the smelter is more due to government subsidies.”

Regardless, Fitch sees some light at the end of the tunnel.

“We do expect strong growth in zinc mine supply resulting from expansions and restarts in key producers, including Peru, Australia and Canada, will eventually boost downstream refined zinc production later in the year,” the analyst said.

“Indeed, this has already started to play out with an increase in zinc treatment and refining charges in China, as a result of better ore availability.”

Variscan is developing its Novales-Udias and Guajaraz zinc projects in Spain as it looks to become a player in the global energy transition. 

Stewart said the company had clear objectives to seek early small-scale production opportunities from the two projects and define a regionally significant resource akin to the nearby Reocin mine. 

One of the largest known zinc-lead deposits in Europe, Reocin was closed in 2003 after almost 150 years of continuous exploitation.

Variscan also holds a net-smelter royalty on exploration ground adjacent to the Woodlawn zinc-copper project in New South Wales.

Develop purchased Woodlawn in February after its previous owner Heron Resources entered voluntary administration in July 2021. The company aims to conduct an aggressive underground drilling program to grow Woodlawn’s inventory, targeting extensions to known mineralised zones.

Woodlawn produced 13.8 million tonnes of 19.7 per cent zinc equivalent from 1978 until 1998. Heron took on the project in 2017.

Other Australian zinc prospects looking to join the likes of McArthur River, Golden Grove and Glencore’s Mount Isa assets in production include BPM Minerals’ Hawkins lead-zinc project in Western Australia, Boab Metals’ Sorby Hills lead-silver-zinc joint venture project in WA, and Eastern Metals’ Browns Reef base metal deposit in NSW.

Stewart said that despite the immediate supply concerns, he remained bullish about zinc’s future. 

“Supply will remain a concern as higher energy costs have the real potential to be a new normal; markets will need to adjust and (so will) new projects,” he said.

“Future focus will be on efficiency and profitability of projects rather than scale … and value creation will triumph over volume production. Additionally, expect to see drive for re-localisation of metal supply, especially in Europe.”  

This feature appeared in the June issue of Australian Resources & Investment.

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