Most likely, the majority of people hearing advice about zinc get it from people advocating its use for health. But the importance of zinc transcends our physical well-being.
In industrial applications, the metal is used in galvanized steel, making it an important material in infrastructure. The U.S. Geological Survey recently added zinc to its list of critical minerals. Critical minerals play a vital role in national security, the economy, renewable energy development and infrastructure.
Investors should recognize that the green energy movement is increasing demand for zinc. The metal is an important component in parts that make up the electrical grid, and it helps to protect solar panels and wind turbines. With the global push towards greater clean energy adoption, it's no wonder that investors are on the prowl for zinc stocks.
4 Best Zinc Stocks to Buy in 2024
Since mining companies don't solely focus on zinc production, people seeking exposure to the metal are left with diversified mining companies, which include zinc among the metals and materials they produce.
| Company | Market Cap | Description |
|---|---|---|
| Glencore (OTC:GLNC.Y) | $76.6 billion | A natural resources company that produces various minerals and metals in addition to maintaining a diverse energy business. |
| Hecla Mining (NYSE:HL) | $4.2 billion | With assets located throughout North America, the company produces precious metals as well as lead and zinc. |
| Southern Copper (NYSE:SCCO) | $62.2 billion | A diversified mining company with assets located in Peru and Mexico. |
| Teck Resources (NYSE:TECK) | $23.1 billion | Produces copper, zinc, and steelmaking coal at assets located throughout North and South America. |
1. Glencore
From the mining of various minerals and metals to marketing crude oil and natural gas to recycling electronics, Glencore operates an extensive array of natural resources businesses in 35 countries on six continents. But that doesn't mean its zinc business deserves short shrift; Glencore is a leading zinc producer.
Glencore produced about 939,000 tons of zinc in 2022, according to its preliminary results. This contributed to the company reporting revenue -- solely from the zinc business -- of about $13.6 billion, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about $1.5 billion. Management forecasts zinc production in 2023 of 920,000 tons to 980,000 tons.
Glencore is a formidable global force among zinc producers. Yet, the company's zinc business doesn't provide the lion's share of the company's revenue. In 2021 and 2022, zinc accounted for 7% and 5% of the company's overall revenue, respectively.
For zinc investors, Glencore's stock presents the opportunity to gain ample zinc exposure while simultaneously mitigating the risk of a steep downturn in the zinc market thanks to the company's other businesses.
2. Hecla Mining
Although Hecla is closely identified with silver -- the company accounted for about 50% of 2022 silver production in the United States -- it's also committed to producing gold, lead, and zinc. In 2022, the company's zinc business accounted for 16% of its overall revenue.
Hecla has assets located throughout North America, from Canada to Mexico, but it relies on only two mines for zinc production: Lucky Friday in Idaho and Greens Creek in Alaska. Since 1989, Hecla has mined about 4 billion pounds of zinc at Greens Creek, and there are plenty of places left to continue extracting zinc from the ground. According to Hecla, Greens Creek has proven and probable zinc reserves of 695,000 tons.
But this isn't to say that zinc production may not expand to other assets in the future. Hecla has several assets with zinc resources in its portfolio that are in various phases of development: Keno Hill, an operating mine located in Canada; San Sebastian, an exploration property located in Mexico; and Star, an exploration property located in Idaho.
In 2022, silver and gold represented 34% and 39%, respectively, of the company's revenue. For zinc-focused investors who are also interested in precious metals exposure, Hecla is certainly worth digging into.
3. Southern Copper
As its name suggests, Southern Copper is a mining company primarily focused on copper production. Southern claims that it's the fifth-largest producer of mined copper in the world and that it has the largest copper reserves of any publicly traded company. Copper, unsurprisingly, figures prominently in the company's financials, accounting for 77% of 2022 revenue.
But that's not to say that the zinc business, conducted at five underground mines in Mexico, is negligible. While molybdenum accounted for 10% of the company's revenue in 2022, zinc accounted for 4% -- more than silver, which came in at 3%. Zinc production is expected to increase in 2023, thanks to a new zinc concentrator (currently under construction) at Buenavista in Mexico. According to Southern Copper, the new zinc concentrator will increase milling capacity and help the company to recover zinc, copper, and molybdenum.
Income investors will also find Southern Copper compelling. Currently, the stock offers an enticing 4.4 forward dividend yield. Skeptics may balk at the high yield, but a look at the company's payout ratio should allay those concerns. Over the past 10 years, Southern Copper has averaged a payout ratio of 72%, suggesting that management is not willing to jeopardize the company's financial well-being to placate people with a penchant for passive income.
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4. Teck Resources
From three assets -- the Red Dog mine in Alaska, Trail Operations in British Columbia, and the Antamina mine in Peru -- Teck has grown a strong zinc business that has made it a global leader, leading it to characterize itself as "one of the world’s largest producers of mined zinc." In 2022, for example, Teck produced 650,000 tons of zinc.
Although steelmaking coal contributed about 60% to the company's top line in 2022, zinc and copper each accounted for 20%. Management said that the company has no plans to forsake zinc.
On the company's fourth-quarter 2022 conference call, Jonathan Price, Teck's CEO, responded to an analyst's question regarding the role that zinc would play in the company's future, saying, "Zinc remains absolutely core to Teck Metals going forward as it is today in the portfolio."
Zinc remains absolutely core to Teck Metals going forward as it is today in the portfolio.Jonathan Price, CEO of Teck
Demonstrating its commitment to the role that zinc will play in the company's future, Teck plans on exploring the economic viability of developing Aktigiruq, a zinc resource located near Red Dog in Alaska, in 2023 and 2024.
Are zinc stocks right for you?
Finding companies that offer exposure to zinc is simple. The harder question is determining which avenue one wants to pursue to achieve this end. If interested in the safety of a diversified materials industry stalwart, Glencore is a compelling choice. However, if you also want the benefit of a precious metals investment or copper investment, then Hecla, Southern Copper, or Teck are better choices.
