Southern Copper CEO sees metal rising to USD 4 per pound
Friday, 06 Nov 2009
Bloomberg cited Mr Oscar Gonzalez Rocha CEO of Southern Copper Corporation as saying that copper prices may rebound to USD 4 per pound in 2010 because of recovering economic growth in the US and Europe and a lack of new supply.
Mr Gonzalez said that “By 2010, the American economy and most of Europe will have recovered from the crisis and consumption will be up. Nor will there be many mines coming online in that timeframe.”
He said that copper, which closed at USD 2.977 per pound in New York, touched USD 4 for the last time in July 2008 before the economic crisis caused prices to slump to a 4 year low in December. Rising construction in China, the world’s largest copper buyer will also spur price gains.
Phoenix based Southern is grappling with declining output after 2 year strike at the Cananea mine which can produce 165,000 tonnes per year. Production has fallen for 3 straight years to about 500,000 tonnes in 2008 from 700,000 tonnes in 2005.
Mr Gonzalez said that Peru is the world’s third largest copper producer after Chile and the US. Southern, holder of the world’s second- largest copper reserves is investing billions of dollars in new mines such as the Tia Maria deposit in Peru and El Arco in Mexico. Production could rise to 1 million tonnes.
Southern plans to spend about USD 934 million on the Tia Maria project in Peru with the aim of producing 120,000 tonnes per year of copper by mid 2011. The company is also expanding its Toquepala mine by about 100,000 tonnes by 2012.
Mr Gonzalez said that Southern is interested in 3 month molybdenum contracts that will be traded on the London Metal Exchange starting in February. The company is slated to produce about 25,000 tonnes of molybdenum. Codelco, Freeport McMoRan Copper & Gold Inc and Rio Tinto Group are the 3 largest producers of the metal used to toughen steel.
