In this article, we will take a look at the 11 best zinc stocks to buy in 2023. If you want to skip our discussion on the zinc industry, go to the 5 Best Zinc Stocks to Buy in 2023.
Zinc is the fourth most widely produced and used metal in the world, behind copper, iron, and aluminum. According to market intelligence firm SkyQuest Technology Group, the size of the global zinc industry stood at $26.64 billion at the end of 2022 and is expected to compound annually at an average rate of 11.6% to reach $64.10 billion by 2030 with an annual estimated production of 21.7 million metric tons. Presently, the price of zinc is hovering around $2,400 per metric ton. In April 2022, zinc prices crossed the $4,000 per metric tonne level following the start of the conflict between Russia and Ukraine in late February 2022, which resulted in significant supply chain disruptions.
The total annual zinc production reached 12.5 million metric tons in 2022, while the global zinc reserves stood at 210 million metric tons. It's worth noting that Australia and China are the primary holders of the largest zinc reserves, collectively accounting for 45% of the world's reserves. China is responsible for nearly one-third of global zinc production and is the biggest consumer of zinc as well. Australia occupies the third position in terms of production but is the biggest exporter of zinc globally, with exports valued at around $1.2 billion in 2022. Moving further, the US has the distinction of being the fifth biggest producer of zinc in the world, with an estimated annual production of 310,000 metric tons. This places the US just behind India, which boasts an annual zinc production of approximately 810,000 metric tons. You can read more about the 15 Largest Zinc Producing Countries in The World here.
Zinc's Versatility Across Industries
Zinc's versatility is evident in its wide array of applications, with a significant portion being utilized for galvanizing steel and iron, as zinc plays the role of an anti-corrosion agent. Galvanized steel is commonly used in car bodies and the construction industry. Overall, 55% of the zinc demand is driven by the construction industry. However, recent global economic uncertainties have led to a slowdown in the construction industry, especially in China, resulting in an oversupply of zinc. According to the International Lead and Zinc Study group, there was an excess supply of 137,000 metric tons from January 2023 to April 2023.
A significant shift in the energy storage landscape is being discussed by experts who propose that zinc could eventually replace lithium-ion batteries in the long term due to the depletion of lithium globally, a trend that could negatively impact lithium stocks. Zinc-based batteries present a promising alternative due to their advantageous features. One key feature is that zinc-based batteries have lower carbon emissions compared to their counterparts. Additionally, Zinc batteries are considered to be safer with a prolonged lifespan and a lower cost of manufacturing. Interestingly, the transition from lithium-ion to zinc batteries can be facilitated smoothly as the plants currently manufacturing lithium-ion batteries can also be used for manufacturing zinc-based batteries due to similar production processes. According to Polaris Market Research, the end-market size for zinc-based batteries is expected to expand from a size of $9.46 billion in 2022 to $12.56 billion by the end of this decade.
Investors seeking exposure to the zinc market often consider investing in some of the best zinc stocks, such as Vale S.A. (NYSE:VALE), Teck Resources Limited (NYSE:TECK), and Newmont Corporation (NYSE:NEM). Additionally, the iShares MSCI Global Metals & Mining Producers ETF (PICK) is also considered among the best zinc ETFs to tap into the broader metals and mining landscape. You can also read more about the 10 Best Copper Stocks to Buy here.
We have used Insider Monkey’s database of 910 elite funds to shortlist the 11 best zinc stocks to buy in 2023. The stocks have been ranked in ascending order of the level of hedge fund ownership as of Q2 2023.
Hecla Mining Company (NYSE:HL) is a Coeur d'Alene, Idaho-based mining company founded in 1891. The company has operations in Alaska, Idaho, and Quebec.
The company has the distinction of being the biggest silver mining company in the US, as it is responsible for mining 45% of all silver in the country. Furthermore, Hecla Mining Company (NYSE:HL) is the third biggest miner of zinc and lead in the US. The company produced 65,000 tons of zinc in 2022. Zinc output from the Green Creek facility provides the company with a strong presence and exposure in the zinc industry. Click here to read Hecla Mining Company’s (NYSE:HL) earnings call transcript for Q2 2023.
Number of Hedge Fund Holders: 19Value of Hedge Fund Holding: $101,436,840
Sibanye Stillwater Limited (NYSE:SBSW) is a South African diversified metals and minerals mining company with a portfolio spread across five continents.
In June 2023, Sibanye Stillwater Limited (NYSE:SBSW) completed the takeover of Australian zinc mining company New Century Resources. The company made this move to highlight the transition towards the mining of environment-friendly metals. Sibanye Stillwater Limited (NYSE:SBSW) already has the distinction of being one of the biggest primary producers of platinum and gold globally and is also involved in the mining of metals like copper, cobalt, iron, lithium, and nickel. Click here to read Sibanye Stillwater Limited's (NYSE:SBSW) earnings call transcript for Q2 2023.
BHP Group Limited (NYSE:BHP) is a Melbourne, Australia-based diversified mining company founded in 1851.
BHP Group Limited (NYSE:BHP) has a 33% interest in the Antamina mine in Peru, one of the world's biggest zinc mines. Furthermore, the company also has a one-third interest in the Cerro Matoso nickel mine in Colombia, which produces zinc as a by-product. The stock offers an attractive forward dividend yield of 5.9%, which is higher than the current benchmark interest rates in the US. BHP Group Limited (NYSE:BHP) strong financials make it one of the best zinc stocks to buy.
Carpenter Technology Corporation (NYSE:CRS) is a Philadelphia, Pennsylvania-based producer and distributor of corrosion-resistant alloys and stainless steels.
As zinc serves as a crucial anti-corrosion agent, Carpenter Technology's focus on crafting specialty alloy products inherently ties it to zinc-related applications. Balyasny Asset Management was the leading hedge fund investor in Carpenter Technology Corporation (NYSE:CRS) during Q2 2023, with a stake valued at over $33.6 million.
Wheaton Precious Metals Corp. (NYSE:WPM) is a Vancouver, Canada-based precious metal streaming and royalty company with a strong focus on gold and silver.
One of Wheaton's notable ventures involves a streaming agreement with the Zinkgruvan mine, operated by Lundin Mining. Located in Europe, the Zinkgruvan mine has a long history of zinc production dating back to 1857. With zinc being the primary metal extracted from this mine, Wheaton Precious Metals Corp.'s (NYSE:WPM) streaming arrangement allows it to benefit from the zinc concentrates produced, which are subsequently transported to smelters across Europe. Furthermore, the company has a streaming agreement on the 777 zinc-copper-gold-silver mine in Canada owned by Hudbay Minerals Inc. (NYSE:HBM) with a right to purchase 50% of the payable zinc production.
White Falcon Capital Management shared its stance on Wheaton Precious Metals Corp. (NYSE:WPM) in its Q2 2023 investor letter. Here’s what the firm said:
“Precious Metals Royalty basket (Wheaton Precious Metals Corp. (NYSE:WPM), SSL, TFPM): In the current macroeconomic environment, there are many ways to ‘win’ with gold. It is remarkable that even with record positive real yields, gold is flirting with all time highs. Why? Western central banks are increasing interest rates which means that they will have to pay more interest on the record levels of debt that their government’s owe. Where will the money come from to pay the higher interest expense? The answer is simple – more debt and more money printing! We believe the gold knows this! We believe that precious metals will protect real purchasing power and act as a hedge to the portfolio when macroeconomic uncertainty arises. Owning royalty companies at reasonable valuations gives us a high quality exposure to precious metals without project or cost inflation risks inherent in a mining company.”
Southern Copper Corporation (NYSE:SCCO) is a Phoenix, Arizona-based mining company that came into being in 1952. The company's zinc concentrate production stems from its Toquepala mine located in Peru. Notably, zinc is also generated as a by-product of its Cuajone mining operations, which are situated in Peru as well.
According to Insider Monkey’s database of 910 hedge funds, Marshall Wace LLP was the biggest hedge fund holder of Southern Copper Corporation (NYSE:SCCO), with a stake of around $40.44 million as of Q2 2023. The hedge fund increased its stake in the company by 179% on a sequential basis.
In addition to Southern Copper Corporation (NYSE:SCCO), Vale S.A. (NYSE:VALE), Teck Resources Limited (NYSE:TECK), and Newmont Corporation (NYSE:NEM) are also among the best zinc stocks to buy in 2023.
