Base metals rarely move in lockstep, and 2026 has been a clear illustration of that. Zinc has climbed to its strongest level in almost four years, driven by tight ore supply and smelter production losses, while lead, generally considered the weakest link in the base metals complex, has continued to lag. For ASX listed diversified miners with exposure across several base metals, that divergence has made portfolio composition matter more than usual.
Zinc’s supply squeeze
Zinc’s rally this year has been driven primarily by supply, rather than any sudden surge in demand. Tight mine supply and smelter production losses have combined to push prices up meaningfully on the London Metal Exchange, even as analysts caution that lacklustre underlying demand means the rally may not be fully sustained through the rest of the year. Zinc’s main use, galvanising steel to prevent corrosion, ties its fortunes closely to construction and manufacturing activity globally, which has been a mixed picture in 2026.
Lead left behind
Lead has told a very different story, falling back toward multi year lows as demand growth continues to underwhelm. Lead’s largest end use, lead acid batteries, faces a longer term structural challenge from the growth of lithium ion battery technology in some applications, even as it remains dominant in others such as starter batteries for internal combustion vehicles. That slower demand growth outlook has left lead trading as the clear laggard among the base metals through the first half of 2026.
South32 and the Hermosa opportunity
South32 has continued to progress its Hermosa project, working toward securing its final United States federal permit for what would be one of the largest undeveloped zinc and manganese resources in the world. A project of that scale, once permitted and funded, would represent a significant addition to global zinc supply over the coming years, though large base metals developments of this kind typically take considerable time to move from permitting through construction to first production.
Why diversified exposure matters here
The zinc and lead divergence this year is a useful illustration of why diversified base metals miners can behave differently to single commodity producers. A company with exposure to several base metals at once can see strength in one commodity partially offset weakness in another, smoothing overall earnings relative to a pure play producer that lives or dies by a single metal’s price. That diversification comes with its own trade off, since investors seeking maximum leverage to a single commodity’s price movement may find a diversified miner’s returns more muted in either direction.
What to watch next
- Further smelter disruption or ramp up news, a key driver of the current zinc supply squeeze.
- Global construction and manufacturing data as a read on underlying base metals demand.
- Permitting progress on South32’s Hermosa project in the United States.
- Lead acid versus lithium ion battery adoption trends across different vehicle and storage applications.
Frequently Asked Questions
Why has zinc rallied while lead has stayed weak?
Zinc’s rally has been driven mainly by tight mine and smelter supply, while lead has suffered from weaker structural demand growth, particularly as some battery applications shift toward lithium ion technology. The two metals are often mined together but can have very different price trajectories.
Is a diversified base metals miner a safer investment than a single commodity producer?
Diversification can reduce the impact of weakness in any one commodity, but it does not eliminate risk. This is general information only, not a recommendation, and anyone considering an investment should assess their own circumstances or seek licensed financial advice.
This article is general information and market commentary only. It does not take into account your personal objectives, financial situation or needs, and it is not financial product advice. Commodity and mining equities carry a high degree of risk, including price volatility and the potential loss of capital. Consider seeking advice from a licensed financial adviser and read our full Disclaimer before making any investment decision.
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