Reuters reported that the world's biggest copper miners agreed on a lot on the outlook is bright for a commodity that has rebounded faster than others.
China's low per capita consumption shows strong demand ahead and supply constraints will continue to dog the market for years to come. But they failed to find common ground on the most important question of all: whether now is the time to throw off last year's restraint and plough ahead with big spending. That division has important implications for a copper price that has more than doubled over the past 15 months, surging to a post-crisis high above USD 8,000 per tonne on April 6th 20910.
It is nearly within 10% of its record USD 8,940 per tonne reached in July 2008, a dramatic recovery unmatched by other assets, brightening the mood in sharp contrast with the lowly prices that cast a gloom over last year's CRU CESCO event.
Investors seeking signed that miners were rushing to capitalize on those prices by ramping up production and green lighting new project got instead a mixed picture, one that may keep them pricing in a weaker supply scenario. Global miners Rio Tinto and Xstrata staked out the most bullish corner, confident they will forge ahead with multibillion dollar projects to ramp up output worldwide as Chinese demand remains strong and signs of recovery emerge elsewhere.
Mr Andrew Harding Rio Tinto's head of copper division said that largely what I see is that everybody who can produce copper is producing copper, and executing projects. My expectations for that are pretty well satisfied that people are doing as much as they can. He said that although Rio Tinto may struggle in the near-term to maintain its annual production rate of 800,000 tonnes as ore qualities decline, it will receive a major boost in 2013 with the USD 5 billion Mongolian Oyu Tolgoi project, for which a final investment agreement was sealed last week.
Mr Charlie Sartain CEO of Xstrata Copper laid out aggressive plans to expand output by 60% to 1.5 million tonnes annually by 2014 spending billions of dollars in mining powerhouse Peru, including its Antamina copper joint venture. He said that over the next 4 or 5 years we will be investing around USD 14 billion in organic growth.
Mr Marcelo Awad CEO of Antofagasta Minerals said that most of the projects that are known to the market require a long term price of USD 2.20 per lb to move ahead and the industry is not yet convinced that copper could be at that level in the long run.
Mr Richard Adkerson chief of the Freeport McMoRan counts himself an optimist, but said that said that he's concerned enough about the US economic recovery to hold off ramping his operations back to full speed. We are facing is a world where China is very strong and has created a copper price that would justify all of our capital expenditure, but two, thirds of the world's copper markets the US, Europe and Japan remain weak.
(Sourced from Reuters)
