Why lead could be one of the best mining stocks to buy in 2023
When investors think of ASX mining stocks, they often think of iron ore, gold and lithium. Lead traditionally hasn’t been the hot favourite – but that could all be changing!
Lead prices hit a four-year high in August 2022, nudging close to $3,800 (USD2,500) per tonne before stabilising around the $3,000 (USD1,985) mark. Lead futures, meanwhile, are on the up and up.
The promising price performance was buoyed by increased demand as the global economy picked up speed. And although there’s talk of a recession overseas, Australian lead miners have remained largely unaffected by any short-term fluctuations.
Lead will be added to the Bloomberg Commodity Index benchmark next year. This is an exciting development for lead traders. The funds that trade the Bloomberg Commodity Index will now be able to get involved in trading in lead.
What’s driving the lead price recovery?
Industrial applications
Lead is a crucial ingredient in Australia’s green energy future. Its use in battery storage technology, LCDs, cabling, and the medical sector is expected to increase demand in the coming years.
Global production is picking up
China, the world’s largest lead consumer, looks set for a long-overdue economic rebound. The OECD predicts the country’s growth will reach 4.9% in 2023. Boab Metals (ASX: BML) has a Joint Venture (JV) agreement with China’s largest lead smelter, putting us in a uniquely favourable position among ASX lead miners.
Narrowing surplus
According to the International Lead and Zinc Study Group (ILZSG), the global surplus of lead will shrink to just 17,000 tonnes this year, down from 69,000 last year. The tightening surplus is due mainly to slower output growth, with Russia’s lead exports sanctioned by the EU and US lead production down 4% in 2021.
For the first time, China became a significant exporter in 2021. Thanks to our JV partnership with Henan Yuguang Gold and Lead Co., Ltd, some of Boab Metals’ lead will travel to China to meet increasing demand.
Snapshot of lead mining in Australia
Australia has 37 million tonnes of lead reserves, making us the largest holder by a long way. China is second with 18 million tonnes.
So much metal means there are inevitably several lead miners on the ASX and a wealth of diversified mining stocks to choose from.
Australia is an attractive investment destination because of our political stability, strong safety record, and reputation as a global leader in mining technology. Altogether, it means more investors (both institutional and retail) are looking to ASX-listed lead miners.
3 reasons Australian lead could be one of the best ASX stocks to buy now
1. Strong outlook
Although a price rise is never guaranteed, the level of investment flowing into lead futures is a signal that many in the industry expect the recent momentum to continue.
2. Resilience
Australian lead production was largely unaffected by the COVID-19 pandemic. So as the world emerges into a production phase, we’re well-placed to meet demand.
3. Projects coming online
Sorby Hills is the largest undeveloped lead-silver deposit in Australia. More than 475,000 tonnes of payable lead reserves are expected to flow into the global supply over the mine’s lifetime.
Boab Metals Limited aims to be the #1 choice for lead miners on the ASX
Boab Metals Limited (ASX: BML) is poised to become the most exciting lead miners on the ASX and one of the talked-about mining stocks of 2023.
There’s a lot to look forward to:
- High-grade lead-silver-zinc deposit
- JV partnership in place
- Offtake agreements expected soon after the definitive feasibility study
- Experienced and committed leadership team
- Clean power supply agreed
- The largest undeveloped mineral deposit among lead miners