copper prices move higher--now $us3.46 per pd, page-2

Spot prices up A$0.66 in last sixty days, according to Kitco...that, despite weak overall equity markets. Likely 5 year copper shortages according to big Japan smelters. (see below)

That equates to extra revenues of A$72m PA, for this $260m company....(on 50K pa copper production).

Additional revenues kick straight to the bottom line as profit....less taxes and royalties.

Ernest Henry $600m expenditure - for 1 km underground operation.....franks the worth of CDU.

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Japan .Copper Ore `Seller's Market' for Five Years, Sumitomo Metal's Kemori Says
By Jae Hur and Ichiro Suzuki - Sep 1, 2010 6:04 PM

Nobumasa Kemori, president of Sumitomo Metal Mining Co., speaks during an interview in Tokyo. Photographer: Haruyoshi Yamaguchi/Bloomberg

Copper ore mined from Chile to Indonesia will be in short supply for at least five years, forcing Sumitomo Metal Mining Co., Japans second-biggest smelter, to keep producing at a reduced rate, the company said.

Its a sellers market for concentrates and I dont think this will change before 2014 or 2015 when supplies from new projects increase, Nobumasa Kemori, president of the company, said in an interview yesterday. The shortage pushed processing fees to the lowest level in almost four decades, according to the Metal Economics Research Institute of Japan.

Production from Escondida in Chile, the worlds biggest copper mine, will drop as much as 10 percent next year, BHP Billiton Ltd. said Aug. 25. Freeport-McMoRan Copper & Gold Inc. plans to defer some output at its Grasberg mine in Indonesia, the second-largest, for safety reasons. Global treatment fees have tumbled as smelting capacity outpaced mine supply, hurting producers in Japan, the biggest concentrate importer after China.

A scarcity will persist for the foreseeable future, Antofagasta Plc, which owns three Chilean mines, said Aug. 24. Barclays Capital raised its price estimates for the metal on Aug. 13, citing increased demand.

The cost of turning ore into metal slumped by more than 15 percent to $39 a metric ton for mid-year supply contracts, Antofagasta said Aug. 24. A fee of $39 a ton and 3.9 cents a pound is the lowest since 1973, according to data compiled by Hirosuke Chihara, a researcher at the Metal Economics Research Institute.

Lower Production

Sumitomo Metal plans to produce 404,000 tons of copper cathode in the year started April 1, 10 percent less than the 450,000-ton capacity at its Toyo smelter, and is likely to keep output at that reduced rate until at least 2014, Kemori said.

We dont want to increase output with raw material sourced from the spot market where fees are even lower, Kemori said. The company secures raw material mostly from shareholdings in overseas mines and long-term contracts.

Jiangxi Copper Co., Chinas biggest producer, said domestic smelters may cut production as processing fees dropped to a historical low. Treatment and refining charges have dropped to a level that doesnt cover the costs of smelting in China, the Guixi, Jiangxi province-based company said Aug. 25.

Production at Escondida will decline as much as 10 percent by the middle of 2011 because of lower ore grades, according to BHP, which owns a 57.5 percent stake in the mine. Output will slide at least 5 percent in the fiscal year through June, the Melbourne-based company said.

Higher Prices

In Indonesia, Freeport-McMoRan plans to defer the mining of about 130 million pounds of copper through 2014 at the Grasberg mine in Papua for safety reasons, Chief Executive Officer Richard Adkerson said July 21.

The copper cash price on the London Metal Exchange will average $6,700 in the third quarter and $7,000 a ton in the fourth quarter, according to Barclays. The previous forecasts were $6,250 and $6,500 in July.

Three-month copper advanced as much as 2 percent to $7,585 a ton on the London Metal Exchange today, the highest level since April 27, and traded at $7,519 a ton at 4:33 p.m. in Tokyo. Shares of Sumitomo Metal climbed 2.4 percent to close at 1,101 yen on the Tokyo Stock Exchange today.

Sumitomo Metal may double expenditure on investment in overseas mines and on exploration in the three years to March 31, 2013, Kemori said. The company, also the countrys biggest nickel and gold producer, may spend 100 billion yen ($1.2 billion) on copper, nickel and gold mines, up from 48.2 billion yen in the previous three years, he said.

The company plans to spend 4 billion yen a year in exploration in the next three years, Kemori said. That compares with 2 billion yen a year in the previous three-year plan. Sumitomo Metal is exploring about 20 sites in Chile, Peru, Brazil, Canada and Australia, with two or three promising ones, he said.