copper

Major copper market developments in September
Tuesday, 13 Oct 2009
Reuters reported that copper prices will be underpinned near term by strike worries, supply problems and the weaker dollar.

A CRU Group copper analyst said that "My instinct is that copper prices could go higher in the short term. The Olympic Dam news is supporting, as well as the threat of strikes and the weaker dollar."

BHP Billiton said that it was still studying what impact the shutdown of a key shaft at its Olympic Dam mine in Australia would have on its production. Copper prices reached a 2 week high as a weaker dollar attracted investors holding other currencies. At 1209 GMT the London Metal Exchange 3 months price was indicated at USD 6,280 per tonne to USD 6,290 per tonne.

Mr Angus MacMillan independent consultant said that he expected the weaker dollar to support prices through to the end of the year.

Mr David Thurtell analyst of Citigroup saw copper benefiting from currency factors and rallies in oil and equity markets.

The CRU Group analyst said that but the demand picture is less supportive. I just don't see underlying demand coming through. She said that "We see a balanced to deficit market in the H1 of 2010 as a result of the restocking effect but a surplus in the H2 with anaemic demand and rising supply."

Below are some of the more significant recent developments in production, stocks and prices that may influence the direction of the market in 2009.

Production

1. September 30 - Chile's Collahuasi copper mine said that it fixed a power problem that was initially estimated to cost about 5% of annual output.

A company spokeswoman said that the company finished repairs to the damaged control room that powers its main conveyor belt on September 14 2009. She declined to give final estimates on output losses.

2. September 30 - Union workers at Chile's Spence copper mine rejected BHP Billiton's collective contract offer and voted to strike.

A union leader said that workers would probably down tools on October 8th 2009. BHP Billiton later said that it would ask for Chilean government mediation to reverse the decision to strike.

3. September 30 - Rio Tinto's Kennecott Utah Copper has reached a labour contract deal with four unions after little more than a month of negotiations

4. September 30 - Vale said that it will begin a partial restart of its Sudbury, Ontario operations this week as signs emerged that workers were becoming frustrated with the 2-1/2 month strike at the site. The company will restart its Clarabelle mill for an initial 48 hour period to work through stockpiled ore. Workers were to begin mining copper and precious metals from the Coleman 153 and Garson Ramp ore bodies this week and Clarabelle will then resume to process the ore from those mines as well as ore from local mines owned by FNX Mining. The mill and mines will be run by 1,200 workers from outside the main bargaining unit that has been on strike since July 13th 2009.

5. September 28 - An official at the mining and energy ministry said that output at Newmont Mining Corporation's Indonesia unit may be up to 10% below its target after a rock fall at its Batu Hijau copper gold mine. Newmont said that there had been a geotechnical failure on September 18th and 19th 2009.

6. September 25 - Chilean state miner Codelco said that it plans to invest USD 367 million in its ageing El Teniente mine in 2010. The investment package would help prolong the life of the mine which has seen its output decrease since 2004 due to lower ore grades.

7. September 24 - Peru's Congress voted to give the financially troubled Doe Run Peru polymetallic smelter a 30 month extension on its environmental cleanup deadline, possibly paving the way for a restart of operations. Doe Run Peru stopped production at its La Oroya smelter in June, when it ran out of money after banks cut off credit.

8. September 24 - Metallurgical Corporation of China said that its copper mining project in Afghanistan with Jiangxi Copper will start production by the end of 2011. The 3 companies began construction of the USD 4.4 billion project in July and have raised the project's designed capacity to 320,000 tonnes of copper in concentrate a year from the previous planned 200,000 tonnes.

9. September 23 - Partners Rio Tinto and Ivanhoe Mines expect Mongolia to approve their huge Oyu Tolgoi copper gold mine soon and the 2 miners are considering potential investments by sovereign wealth funds. The 2 companies signed a long term investment agreement with Mongolia on October 6th 2009.

10. September 23 - Diversified South African miner African Rainbow Minerals said that a decision on the Konkola North project in Zambia would be reached in the Q2 of 2010. The project is expected to produce up to 45,000 tonne per year of copper.
11. September 22 - Antofagasta said that it favors a loan to fund the expansion of its Los Pelambres copper mine in Chile and expects to close a deal by November or December. The USD 750 million loans currently under negotiation will help ramp up copper output at the mine, its biggest operation. It said that the Esperanza mine project and Los Pelambres expansion were on track to lift output to around 700,000 tonnes of copper in 2011.

12. September 21 - The International Copper Study Group said that the world copper market saw a deficit of 292,000 tonnes in the January to June period compared with a deficit of 234,000 tonnes in the same period of 2008. The ICSG said that world refined copper output in January to June was 8.886 million tonnes and consumption was 9.178 million tonnes.

13. September 21 - Jiangxi Copper said that it plans to expand its annual capacity of refined copper by more than 10% to 1 million tonnes by 2012. The capacity expansion will coincide with a key mining project in Afghanistan moving into production. The company has said that it plans to produce 800,000 tonnes of refined copper in 2009.

14. September 18 - Huludao Zinc said that it is doubling its copper smelting capacity by late 2010 to 150,000 tonnes. For now, Huludao has no plans to expand its 100,000 tonne per year copper refining facility.
(Sourced from Reuters)