new global copper mine production

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London-based Bloomsburg Minerals Economics foresees a reduction in copper mine production as new copper projects are failing to meet production forecasts.

Author: Dorothy Kosich
Posted: Wednesday , 24 Sep 2008

LAS VEGAS -

Bloomsbury Metals Economics Christopher Welch warned Tuesday that “everything that could go wrong is going wrong” in copper mine production, as new copper projects are not meeting production expectations.

In a presentation to MINExpo in Las Vegas, Welch forecast a reduction in copper mine production, as well as a deficit of refined global copper this year.

Welch noted that supply chain stocks are still at multi-year lows, which copper mine development and operation has become more difficult due to high input costs and low equipment availability.

“We’re pretty much in a trough of physical [copper] stocks,” he advised.

Among the current copper production constraints are the following:

· 10% of total mine copper production is linked to power problems currently experienced in Chile



· Severe lack of trained personnel



· Dramatic development cost increases



· Environmental costs including regeneration bonds, baseline study costs, and water use constraints



· Equipment production bottleneck



· Production cost increases including a high oil price, high sulphuric acid price, and high staff costs



Welch suggested that “rising production costs are underpinning the long-term metals price.”

In his presentation, Welch highlighted that base metals mining has been getting a “wall of money from pension funds,” beginning in 2005. As a result Welch asserted that a new economic model for base metals should require consideration of commodity index funds’ demand for metal futures in addition to currency market fluctuations, price per tonne, as well as stock cycles.

When asked if major copper deposits remain awaiting discovering, Welch responded, “The low-hanging fruit for copper mining has all gone.”