copper

Here's another reason to spend the kids' inheritance
Barry FitzGerald - The Age
December 1, 2010 - 9:17AM

Bullish predictions on the price outlook for copper are a dime a dozen. It makes you wonder why people aren't cashing in their kid's endowment policies and loading up with copper, or at least producers of the red metal.

The reasons for the raft of bullish price predictions are well known. It's all about the growth in demand caused by the electrification of the emerging economies at a time of falling grades and reserves pressure at established mines, and the increasing number of approvals roadblocks faced by new projects.

London-based metals consultancy GFMS is one of the latest to outline a rosy future for copper. It reckons that apart from the impact on demand/prices from an economic slowdown in the first half of 2011, it will be a case of onwards and upwards thereafter.

So much so that GFMS is prepared to predict that copper prices will rally from the first half of 2011 setback to prices ?well above? $US11,000 a tonne in 2013. That's more than 30 per cent from where the copper price currently sits.

Societe Generale's analysts have also chipped in, saying the rise of exchange-traded (metals) funds, and the resultant diversion of metal away from end users of the stuff, means that copper prices are likely to rise "significantly".

Local exposure to copper comes with the big three of the metal on the ASX ? BHP Billiton, Rio Tinto and OZ Minerals. But as you might suspect, Garimpeiro's interest is in the more leveraged plays to the copper boom we keep getting told is unfolding.

BHP and Rio will do well out of a 30 per cent-plus rise in copper prices over the next three years. But who knows, over supply in iron ore might see them hit by tanking iron ore prices. That leaves OZ as the pure producer play. But it has to sort out what it is going to do with its cash pile of some $1.5 billion before we'll know what it will look like in 2013, or next year for that matter.

End of Story

Explorers like MNC look to be in the right place at the right time!!