Thought I'd share an interesting article from the Australiann...

Thought I'd share an interesting article from the Australiann yesterday...
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Copper mines unable to support demand growth: Rio Tinto

PLANNED copper projects will be unable to support demand growth at current rates, according to mining giant Rio Tinto.

The global miner said the struggle to meet demand could see the market for mined copper in deficit for most of the next decade.

In slides presented at an industry conference in London, Matthew Holcz, general manager, business development of Rio Tinto Copper, saw production from probable copper mining projects as only able to support annual demand growth of 3 per cent a year by 2020.

If demand for mined copper grows at 5 per cent a year, the market won't go back into surplus by 2020 even if all probable greenfield projects go into production, pushing mined copper output from the current level of around 16 million tonnes to more than 22 million tonnes.

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Around 80 per cent of global copper consumption comes from mined sources, with the balance made up largely from scrap recycling.

In a report earlier this month, the International Copper Study Group estimated demand for the red metal will rise by 3.81 per cent in 2010 and 4.49 per cent in 2011.

Rio Tinto is one of the world's biggest copper miners, with non-controlling stakes in Escondida in Chile and Grasberg in Indonesia, the world's two largest copper mines, and 100 per cent ownership of the Bingham Canyon mine in Utah, historically one of the world's most productive copper mines.

The company also has stakes in Mongolia's Oyu Tolgoi project, seen as the world's best undeveloped copper-gold project, and Alaska's Pebble prospect, the world's largest undeveloped copper resource.

Mr Holcz said that less than half of the world's copper supply in 2020 will come from low-risk regions, compared to nearly two-thirds in 2000. High-risk regions will account for 9% of global supply, he said.

Ore grades will also continue to decline toward 1 per cent contained copper, although at a slower rate to 2020 than over the past few decades, while major new copper discoveries are increasingly deep below the surface.

Copper is seen as a barometer of global economic health but its rise to the highest levels since July 2008 has come despite renewed concerns around global economic growth.

Analysts believe that the weakening US dollar - which raises the cost of dollar-denominated commodities -concerns about the performance of paper currencies, and expectations of a supply deficit from next year have driven the metal's rise. Three-month copper futures traded on the London Metal Exchange were $US8340/tonne.

Average per person consumption of the metal will rise from around $US12 to around $US16 by 2020, Rio Tinto estimates. Consumption in developed economies plateaus around the $US25-a-head level.