In June, I told readers that zinc would be the next base metals superstar, thanks to looming supply shortages.
Since then, zinc prices have continued to rise. In fact, thanks to increased demand, they’ve hit a three-year high at $2,300 per metric ton (mt). That’s a 23% increase since December!
Amazingly, though, there’s more good news. You see, there’s another source of demand for zinc on the horizon: fertilizer.
As famed mining entrepreneur Robert Friedland recently pointed out, zinc “is now recognized, along with potash, as one of the most intense organic fertilizers.”
As a result, the agriculture industry is on the verge of creating vast new demand for this new metals superstar.
Zinc for Life
Friedland’s claim is backed up by a study from research firm, IHS Inc. (IHS), which claims that the world’s population will exceed nine billion by 2050. That’s an increase of 30% over today… and the change will result in a 70% increase in food consumption.
And even if that forecast is too aggressive, a rising population will undoubtedly result in greater food consumption. Luckily, zinc has proven to be an effective tool to combat this concern.
Studies completed in Brazil, China, India, and Turkey showed that adding zinc as a micronutrient in fertilizer raised crop yields by 8% to 12% and increased zinc content in the harvested grains by 20% to 40%.
That’s crucial, because plants need zinc to synthesize proteins and generate energy. Plus, zinc consumption is important for humans too.
Zinc in Fertilizer
Not surprisingly, IHS predicts that the biggest demand growth sector for zinc chemicals through 2018 will be in fertilizer (using zinc sulfate, mostly). By 2018, about 400,000 mt of demand for zinc chemicals will be tied directly to agriculture.
As with so many other commodities, the biggest source of demand for zinc fertilizer comes from China.
In fact, the Chinese government specifically recommended farmers use zinc-enriched soil for their crops over the last two years because of an estimated 60% zinc deficiency. As a result, Chinese demand is growing by about 100,000 mt annually.
There are a number of investments in this sector, but one I like is Mosaic (MOS), a fertilizer company that actively supports zinc’s increasing usage as a micronutrient in fertilizer.
MOS is a premier sponsor of the global HarvestZinc Project, which promotes zinc use in fertilizer around the globe. And, of course, it’s also a major producer of zinc-containing fertilizers like MicroEssentials SZ.
The company is pushing its use in the northern tier of the United States, as well as in the developing world, and should see an upswing as the zinc trend continues to grow.
And “the chase” continues,