urbanisation china will continue to need a gro

Urbanisation is among the principal reasons as to why China will continue to need a growing amount of copper. Close to 55 per cent of the Chinese population is now living in urban centres, up from 26 per cent in 1990. As the target is to urbanise at least 70 per cent of the population by 2035, China will remain the world's most active centre for construction of high-rise buildings in new cities and rapid transit system. Greater the pace of urbanisation more will be the demand for copper, which finds application in electrical wiring, plumbing, communication system and air-conditioners. Unfinished urbanisation in China must have weighed upon the spokesperson for Freeport-McMoran, operator of the world's one of the largest copper mines in Indonesia when he told Reuter's that "we are still seeing robust consumption in China. Of course there can be hiccups here and there... Chinese consumption of copper will keep growing for more than a decade." Trade officials say China will remain a major importer of both refined copper and copper concentrate, the feedstock for smelters even if economic growth for 2014 falls below 7.5 per cent target. China will perennially remain a big importer of concentrate because most of its deposits are small. The major ones are located in areas where mining is a difficult proposition.

Besides China, emerging economies, India in particular, are where surplus copper to be generated from new mines will get absorbed.

"India's per capita consumption of copper is ridiculously low at close to half-a-kg against 5.5 kg in China, about 11 kg in the US and the world average of 2.5 kg. Urbanisation and the expanding power sector will be the two principal strands on which future copper use in India will grow. Expect China's per capita use level to come progressively closer to the US level and India's to the global average," says an industry official. India's copper use of over 600,000 tonnes constitutes a small portion of the world production of around 21 mt. Last year, India's refined copper production amounted to 691,210 tonnes, including 353,000 tonnes by Vedanta, 314 tonnes by Hindalco and 24,210 tonnes by Hindustan Copper. Except for Hindustan Copper, the other two groups depend entirely on imports of concentrate to run their smelters.

Their earnings depend upon treatment and refining charges (TC/RC) embedded in concentrate prices. Processing charges are subject to fluctuations, depending on global supply of concentrate. Smelters without mines linkages get higher TC/RC in surplus concentrate supply situations. The opposite is the case when shortages occur. In recent months, the charges have moved in a range of 10 to 13 cents a pound for standard concentrate for delivery to China.