Some further news about the impending (if it isn't here...

Some further news about the impending (if it isn't here already!) copper deficit. Comments from Freeport' CEO at the BMO conference AVB is attending (I expect we might see a presentation from AVB sometime this week) and second article re Escondida strike. Despite some media reporting that BHP and unions are at the table talking, this is news to the unions who say no communication has taken place recently.

Freeport sees copper market headed for 'inevitable' deficit

By Alex Emery
Monday, February 27, 2017


The copper market is "inevitably" heading for a deficit as disruptions hit major mines such as Chile's Escondida and Indonesia's Grasberg and new projects are delayed, Freeport-McMoRan CEO Richard Adkerson said.

Copper markets have "far outpaced expectations" over the past six months and are supported by economic fundamentals as demand for the metal rises and new projects will require US$3/lb prices to build, Adkerson said.

Projects such as Resolution Copper's Resolution mine in Arizona face challenges "on a number of fronts," Adkerson said, adding copper surpluses predicted in 2016 have not emerged. Freeport, which has six projects in its pipeline, would take 10 years to see significant production from these, he said.

"Global economic conditions, particularly conditions in China, have improved," Adkerson said at the BMO Capital Markets 26^th Global Metals and Mining Conference in Hollywood, Florida. "Supply growth has always been challenged and continues to be even with higher prices."

Workers have been on strike at BHP Billiton's Escondida mine in Chile since February 9, while Freeport shut down Grasberg on February 14 because of an export ban.

MOLYBDENUM
Freeport, which holds a controlling stake in the Cerro Verde mine in Peru and El Abra in Chile, increased copper production to 4.647Blb last year from 4.017Mlb in 2015, while its molybdenum output slid to 80Mlb from 92Mlb. Freeport said it plans to invest a total US$1.8bn in projects this year, down from US$2.8bn in 2016.

While molybdenum prices have not increased as much as other commodities, Freeport is "managing with the current price environment," as the company's chemical form of molybdenum output receives better prices than other producers, Adkerson said.

Copper prices jumped 30% to about US$2.70/lb on the Comex over the past six months, while molybdenum climbed 5% to about US$7.65/lb in the same period. Copper is used for electrical wiring, electronics and tubing, while molybdenum is used to harden steel and in fertilizers.

Freeport last month reported a US$4.15bn loss for full-year 2016, compared with a US$12.2bn loss reported a year earlier, as sales rose to US$14.8bn from US$14.6bn in 2015. Cash costs fell to US$1.26/lb copper in 2016 from US$1.53/lb a year ago.
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Escondida copper mine strike nears 3rd week; union denies new talks | Reuters
Escondida copper mine strike nears 3rd week; union denies new talks
By Fabian Cambero | SANTIAGO

SANTIAGO Feb 27 A strike at the Escondida copper mine in Chile, the world's largest, appeared far from ending on Monday as the conflict neared its third week, with the union denying a news report that it had returned to talks with mine owner BHP Billiton.

Escondida's approximately 2,500 workers began a strike on Feb. 9 after contract talks with BHP failed, pushing global copper prices higher on expectations of tighter supply.

The mine produced about 5 percent of the world's copper in 2016.

Last week, the two sides briefly returned to the table for government-mediated talks, though the discussions ended after one meeting.

The union told Reuters on Monday it had not been approached about resuming talks and denied a report quoting the BHP chief executive officer saying the two sides were back at the table.

Relations have been frosty, with BHP accusing the union of preventing non-union maintenance workers from entering the mine, and the union saying that BHP has failed to make back payments to workers.

"That's the way the company starts to insult the workers, to scare and pressure them, and leave them without money ... That is making workers angry," union spokesman Carlos Allendes said.

BHP has said that it would pay the money that is owed once the strike ends, in accordance with Chilean law.

The workers have continued construction of a camp set up outside Escondida in Chile's barren high desert, which the union says will provide comfortable conditions in the event of a prolonged strike. In recent days, they have built a basic movie theater and sporting arena.

BHP will not replace striking workers for at least the first 30 days of the work stoppage to show that it is committed to negotiations, according to the company.

Under Chilean law, unionized workers can cross the picket line and individually accept the company's contract offer after 30 days on strike, potentially weakening the union's hand.

The contract talks relate to pay, bonuses and other conditions, with disagreement principally over the status of new workers and proposed changes to shifts and benefits.

Escondida is majority-controlled by BHP with Rio Tinto and Japanese companies including Mitsubishi Corp holding minority interests. (Writing by Gram Slattery; Editing by Rosalba O'Brien and Jeffrey Benkoe)