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D E C E M B E R / J A N U A R Y 2 0 1 8 www.resourceworld.com 31 indicate that silver is undervalued. Earlier this year the ratio fell to as low as 68, but has recently been stuck between 74 and 80. The modern historical average is around 40 to 1 and the long term historical average is 15 to 1. For the ratio to return to 40, then silver would need to be around $30/oz at current gold prices. COBALT Cobalt is produced mainly as a by-product of copper and nickel mining with the cop- per-cobalt sulphide deposits of the Central African Copper belt being the principal source. The Democratic Republic of the Congo (DRC) dominates global mine pro- duction accounting for roughly 65% of global supply. Nickel operations in Cuba, Russia and Australia are other impor- tant sources. The refined metal is mostly consumed in nickel alloys, tool materials, magnets, electric vehicle batteries and chemical additives. According to the met- als research firm Roskill, the outlook is positive for cobalt with strong demand from the aerospace and industrial manu- facturing sectors to continue. COPPER Latest reports by the International Study Copper Group (ISCG) show that after growth of almost 6% in 2016, world mine production after adjusting for historical disruption factors is expected to decline by around 3% in 2017 and grow by 2.5% in 2018, driven by the re-starting of tem- porary closed/reduced capacity in the DRC and Zambia, and to a lesser extent additional output from new projects/ expansions coming on stream. Chile, DRC, Peru and Zambia are expected to be the biggest contributors to mine production growth in 2018. China is set to remain the biggest con- tributor to world refined production growth in 2018. Infrastructural develop- ment in major countries such as China and India will continue to sustain growth in copper demand coupled with antici- pated improvement for the world economy which, although modest, should support copper demand growth. Goldman Sachs recently upped its target for copper prices based on the outlook for global growth and because the market now faces a potential deficit next year, not the surplus it and others previously forecast. Goldman raised its average 12-month tar- get to $7,050 from $5,500/tonne. ZINC Zinc is used to coat steel to stop it from rusting. Production from the Chinese automotive sector, though weaker than last year, has helped recent zinc demand, while China's better-than-expected second quarter gross domestic production growth of 6.9% has boosted metals across the board, S&P Global said in a recent report. Prices are getting a further boost from a seasonal third quarter uptick in China's steel industry. Wood Mackenzie, a commodities-indus- try consultancy, estimates prices averaging $3,500/tonne between 2018 and 2020. They calculate that reactivation projects which are currently on care and mainte- nance would provide up to 250,000 tons of extra zinc a year, but this "falls well short" of the 2 million tons of incremental supply needed to meet forecasts of global demand by around 2020. Instead, tonnage from so-called greenfield sites, or new produc- tion, would be needed to really ramp up production. Analysts expect that Chinese supply will also be curtailed as environmental directives aimed at tackling water contam- ination from heavy-metals mining kick in this winter, curtailing zinc production in the country responsible for 40% of global zinc supply. LEAD Lead is a base metal predominantly used in lead-acid batteries for the automotive industry. Production of the metal is mostly as a by-product of zinc mining and has been declining following the closure of large depleted zinc mines and, in China, lead production is being hampered by increasing environmental constraints. At the beginning of October this year the price of lead spiked on the London Metal Exchange hitting the highest level since August 2011 at just over $2,600/ tonne. The price has since softened but is still trading up 27% year-to-date. Higher prices are encouraging additional mine and scrap supply, as more than half of lead production is from recycled batteries. The market is expected to remain in deficit next year, but increased use of lithium-ion batteries is expected to weigh on demand for lead in the medium term. PLATINUM & PALLADIUM Platinum and palladium have benefitted from a huge boost in demand as both are key components auto catalytic converters and auto sales have been on fire. Last year was the seventh consecutive year in which global auto sales rose and 2017 is on track to continue that trend. Yet, while demand is rising, supplies are extremely tight. 2016 was the fifth consecutive year that platinum production failed to meet demand. And 2017 is already shaping up to be the sixth. One of the major factors behind the shortfall is mining stoppages in Africa. The two largest producers, Anglo American and Impala Platinum, are both struggling with labour issues in their native South Africa. Platinum is currently trading around $930/oz and palladium at around $1,000/ oz. Shrinking and unreliable supply, cou- pled with firm demand, should continue to drive platinum and palladium prices higher. NICKEL As recently as March this year, the LME three-month nickel was on a bull roll,