Zinc Infused Fertilizer Growth Could Explode to the Upside; Here’s How to Play It

I don’t know how zinc deficiency became a thing to worry about. But, according to a study done in The Lancet, it kills 450,000 children annually — all under 5. What in the fuck?

The solution? Injecting the ground with zinc, naturally.

It could prove to be wondrous for farmers and miners, so why not do it?

Mosaic, ticker $MOS, is trying to capitalize on this deathly problem, by selling zinc-infused fertilizers. Also, $TECK has a ‘test project’ ongoing in China — which is code talk for using humans in live trials.

These lunatics are now surmising how to dedicate entire mines towards the goal of producing exclusively for crops. With supply already tight and prices higher by 40% over the past 12 months, this could provide buoyancy for the metal and subsequnet miners for years to come.

“It’s slow growth, but it’s steady growth,” said Sean Davis, the principal analyst for a Houston-based unit of IHS Markit, a global mineral industry researcher. He estimates farmers will increase zinc use by about 4 percent annually over the next five years.

Last year, only about 270,000 metric tons of zinc was used on crops globally, IHS Markit estimates. That compares with 12.1 million tons by all users, according to Bloomberg Intelligence. However, with almost two thirds of the world’s farm deficient in zinc, demand in agriculture could triple to 900,000 tons if it was used everywhere it’s needed, Davis said.

More zinc in fertilizer could compound already tight supplies. Global demand has exceeded mine output in two of the past three years, after producers cut back during a slump in prices. Now, stockpiles monitored by the London Metal Exchange are down 71 percent from a peak in 2012 and the lowest in more than seven years. Prices on the LME touched a nine-year high in November of $2,985 a ton, and are up 39 percent from a year earlier.

Researchers have been studying the benefits of zinc in crops as more of the world’s soil becomes stressed and loses nutrients. Arid and semi-arid regions are the most vulnerable because plants only absorb zinc when it’s dissolved in water.

A 2012 study by Agrochimica, an agriculture journal at Pisa University in Italy, showed as much as 70 percent of farmland in India and Pakistan is zinc deficient, as is more than half the soil in China. Adding zinc to fertilizer can help, though results vary by region and crop. In the U.S., the largest agricultural producer, grain yields have increased anywhere from 12 percent to 180 percent with the addition of zinc, the journal reported.

Back to the trials in China by $TECK. In conjunction with the Chinese Ministry of Agriculture, rice crop yields have increased by 20%, and a 40% bump in nutritional value. This will likely lead to massive usage of government sponsored zinc fertilizers in China.

If government edicts are carried out in China, zinc infused fertilizer usage is expected to rise from the current level of 20,000 tonnes to 300,000.

“Obviously, the potential for this in terms of market is quite impressive,” said Marcia Smith, Teck’s senior vice president of sustainability and external affairs. “It’s a win for industry. It’s a win for local farmers because they’re producing more on their plot of land, and it’s a win for kids and anyone who has a zinc deficiency.”

Best ways to play this, in my opinion, are $TECK, $HBM, $VEDL and maybe $MOS.

 

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