The heads of the copper divisions of some of the world's largest mining companies, including Codelco, BHP Billiton, Antofagasta, Rio Tinto and Collahuasi, have expressed their confidence in the future of the market.
Speaking during the opening of the second day of the 2017 World Copper Conference being held in Chilean capital Santiago, the chief executives' comments marked a swift turnaround from previous versions of the conference, organized by consultancy firm CRU.
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The year has started with market tightening due mostly to sustained consumption growths in China, but mostly because of supply disruptions at some of the world's largest copper mines, including BHP Billiton's Escondida mine in Chile and Freeport-McMoRan's Grasberg mine in Indonesia and Cerro Verde in Peru.
On top of that, the lack of major mining projects coming online in the coming years is likely to lend support to the already constrained supply coming from existing operations, which are facing lower ore grades and depleting deposits.
There are no new mines with excess capacity of over 100,000t coming online this year and only a handful in the coming years, said CRU chairman Robert Perlman.
Iván Arriagada, CEO of Antofagasta Minerals, told the event he was cautiously optimistic for this year, and that he doesn't expect copper prices to return to the lows seen in 2016.
In early 2016 the price of copper traded briefly below US$2.00/lb, before managing to recover towards the fourth quarter. Chilean copper commission Cochilco said in a January report that the average price between January and November was US$2.15/lb, while between November and December it recovered to US$2.56/lb.
The sentiment was also shared by Arnaud Soirat head of the copper and diamonds unit at Rio Tinto, who said his company expects the copper market to enter into a small deficit this year.
The executives also highlighted some of the challenges the industry is facing, particularly in Chile, the world's biggest copper exporter.
Challenges mentioned by the chief executives include the establishment of new relationships with workers and neighboring communities, the adoption of new technologies to boost productivity, and environmental challenges to existing operations.
Daniel Malchuk, BHP Billiton's head of Minerals Americas, fresh off a 44-day strike at Escondida, said the industry is facing a key moment to transform, and that a public-private partnership is needed.
"No matter how hard it is, change and transformation is fundamental for the long-term future of the industry," Malchuk said, calling for all stakeholders to join efforts in that task.
Codelco CEO Nelson Pizarro echoed those comments, adding that a new business model is required for mining in Chile.
The industry veteran highlighted some of the constraints facing Codelco as a state-owned company. Codelco, for instance, cannot dispose of some of its assets, despite this being one of the tools being used by the industry during the economic downturn.
Pizarro also mentioned the high debt levels of Codelco, currently some US$14bn, which he said was due to the US$41bn turned over to the owner – the Chilean state – compared to US$40bn being invested in its assets in 2007-17.
Vanessa Davidson, head of CRU's copper research and strategy, said for the first time in six years that she was able to deliver an upbeat view of the market, noting that with the exception of cobalt, CRU expects copper to outperform other metals this year, including zinc, iron ore, nickel, aluminum and metallurgical coal.
If global growth in demand continues at around 2% per annum in the next years, the copper market will move into structural deficit, Davidson said.
The World Copper Conference runs until Wednesday.
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