Trump’s Tariffs Could Kill Base Metals, What About Precious?

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A global trade war, spurred by U.S. President Donald Trump’s protectionist policies, could weaken global demand for base metals, zinc in particular, this according Brandon MacDonald, CEO of Fireweed Zinc.


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“Every base metals is going to be vulnerable to a weak global economy, that’s how base metals operate, so if a trade war breaks out and it has a diminishing effect on galvanized steel consumption, then it’s going to be difficult for zinc,” MacDonald told Kitco News on the sidelines of the Yukon Mining Investment Conference in Dawson City.

MacDonald added that there is a real threat to Chinese zinc production owing to intensifying regulatory scrutiny. China is currently the world’s largest zinc producer, but there are many small mines that would not survive high grade regulation, said MacDonald.

Trump’s Tariffs Could Kill Base Metals


Welcome to the Kitco we’re in Dawson City Beautiful Dawson City at the Yukon mining investment conference. I’m here with Brendan MACDONALD CEO of fireweed zinc. Welcome to the show. Thanks thanks. The Yukon is the Klondike but you’re developing product you’re developing based metals I mean. What kind of potential is there that you’re finding for base metals in the Yukon. You know Yukon’s very famous for gold right a very storied for that but it also has a history of base metal mining the Selwyn basin where our deposits sit is actually quite famous for zinc so the Cerro mine which operated in Yukon from I want to say 69 to the 90s off and on was at one point the largest zinc mine in the world and was a big producer. So you know zinc production in Yukon is not unprecedented Yukon Zinc you know how it’s Passau to Shihan mining and as well so perhaps what people first think of when they think EconoLodge a change of mind but it’s actually maybe it should be like it’s it’s you know it is a good base metal jurisdiction and we’re pretty happy to be proving up what is what is shaping up to be a world class deposit as well. Let’s talk about the zinc. I mean it’s hot right now. I mean it is is now a good time to be an explorer in this space. Yeah I mean look exploration is driven by the availability of funds.

So being in a metal that’s performing definitely helps with the closure of machine in Century and Glencore shuttering some production that made a huge difference in the price of zinc which means that it is easier to find those dollars. Now we’ve we’ve been able to successfully raise quite a bit of money but not just supply demand is also increasing. I do have to ask you I mean you know trade tensions are increasing sort of around the world know steel tariffs I’m sort of wondering I mean is that is that a concern for the base metals I mean if we’re we fall into a trade war economic growth and global economic growth drops Yeah but does you know can Ken survive in this supply demand fundamentals. Yeah I mean every base metals going to be vulnerable to a weak global economy. All right that’s that’s how base metals operate. So if a trade war breaks out and it has a significant diminishing effect on galvanized steel consumption then yeah it’s going to be difficult for zinc. I mean zinc is unique in terms of the base metals all the base metals have that same play that same story of of diminishing discovery lowering had grades set up sort of set up but zinc is unique that China really is an outsized producer such a significant portion of the gold production comes from China. So you know it’s a question of if that if that supply can be stable or grow maybe in a trade war situation that’s bad for zinc but I think it might peel off right. So I mean that things that I’ve heard from analysts are Chinese production is going to be dropping because of their ever increasing stringent environmental policies. So again.

Yeah and you know so China does not have a single large zinc mine despite the fact they have the world’s largest zinc production by a huge margin. So it mostly comes from small mines which most of which are unpermitted and it could be just two guys with an excavator right and those mines will not stand up to regulatory scrutiny and will not even if they could would not last long anyways so as they go from one high grade occurrence to another know a surface type mining they’ll soon exploit them all. They won’t necessarily scale to large mines and even the ones that can or are going to suffer real intense scrutiny now. So I think there’s a real threat to Chinese mines APOC now I have to ask this. You don’t have to answer her but with a name like fire we’d hear how many people think you’re alive. It’s a running joke that if the zinc doesn’t work out we pivot into marijuana with no name change. It’s a good plan B. That’s perfect Yvette’s. Thank you very much for being on the show. Yeah yeah. Thanks for being. Thank you for being here. So stay tuned for more coverage from Dawson City.

Kitco News is the world’s #1 source of metals market information. Our videos feature interviews with prominent industry figures to bring you market-affecting insights, with the goal of helping people make informed investment decisions.

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