From Tesla Cars to Underwear, Metal Makers Seek New Markets

The world’s biggest mining companies would like you to put more zinc in your zucchini and copper in your socks and dental floss.

While builders and manufacturers remain the biggest metals users, producers are confronting the end of a Chinese industrial boom that fueled surging global demand and prices. For more than a decade, the country dominated markets as it sucked up raw materials to build factories, homes and power lines. Now, with the industrial engine cooling, mine owners are looking for new uses to spur sales like in fertilizer, electric-car batteries and salmon cages.

“Traditional demand isn’t going to fall off a cliff,” said Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London. “But it’s true that no one wants to hear about industrial production growth or Chinese cement demand anymore.”

Sales are growing for zinc-infused fertilizers from companies including Mosaic Co., especially after a 2008 study estimated 450,000 children under the age of five die each year from zinc deficiency.

Adding zinc into fertilizers could consume as much as 600,000 tons of the metal — or about 4 percent of global demand – in “the not too distant future,” Don Lindsay, the chief executive officer of metals producer Teck Resources Ltd., said at a conference last month.

At the same conference, Glencore Plc boss Ivan Glasenberg promoted the idea that his company mines minerals like cobalt, nickel and copper needed to build the growing number of electric vehicles.

If 95 percent of the world’s auto sales are electric vehicles by 2032, the industry would need 20 million tons of copper annually — roughly equivalent to usage in every other application combined in 2016, Glencore estimates. For cobalt, that scenario would mean an increase in demand of 679,000 tons, or 5 1/2 times of what the world produced last year.

Expanding Capacity

Manufacturers in China aren’t taking any chances. Production capacity for copper foil — a component in the anodes used in lithium-ion electric vehicle batteries — is set to double within the next two years as 15 new manufacturing plants ramp up, according to the International Copper Study Group.

Metal producers should take their cue from the aluminum industry to prepare for changes in demand, Bernstein’s Gait said. When oversupply left prices low, aluminum producers invested in downstream ventures to promote the lightweight metal as a substitute for steel and copper in such products as autos and electrical wiring.

“Aluminum isn’t really the best material for these kinds of applications,” Gait said. “But when they found no one wanted to buy their commodity, producers went out and bought downstream assets to develop competitive products themselves. Other miners could certainly benefit from taking those kinds of opportunities more seriously.”

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