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Copper executives warn on rising costs and regulation

Metal News - Published on Tue, 05 Dec 2017

Image Source: Reuters
Reuters quoted executives from major copper companies as saying that global copper market will be balanced for the foreseeable future even as mine supplies tighten and demand from China, the world’s top consumer, remains strong. The forecast came as executives warned that rising environmental regulation in Chile, the world’s top producer, and China, the world’s top consumer, are raising production costs for smelters and miners.

Mr Ivan Arriagada chief executive officer of Antofagasta PLC said that he expects the market to be balanced or in a small deficit this year and into 2018. Mr Arriagada said at the Asia Copper Conference that refined copper demand is growing at a “healthy rate” of 4 % this year and new production “has largely already been absorbed in the market.”

Mr Arriagada said that declining ore grades, prolonged bureaucracy for getting new projects approved and technical challenges will continue to constrain supplies.

The executives said that these issues are spurring miners and smelters to develop new innovations, such as using artificial intelligence, to improve productivity and efficiency.

Mr Liangang Li, deputy general manager of China Minmetals Non-Ferrous Metals Co said he expects a balanced market for the next two years. The company is part of China Minmetals Corp , one of the country’s largest miners and metals traders.

Copper prices on the London Metal Exchange remain elevated at around three-year highs, even topping USD 7,000 per ton on Monday, as investors bet on stronger demand from electric vehicles and investment by China in its power grid as the country seeks to boost clean energy use.

However, there are concerns about the strength of Chinese demand and manufacturing as the country imposes unprecedented steps to curb the smog that blankets the north of the country in the winter.

The executive said that copper prices need to remain high north of USD 6,600 per ton to encourage investment in new mines to replace falling ore grades in some of the world’s oldest mines in Chile.

China Minmetal’s Li said that“If prices can’t stay at a certain level, new investment in copper mining will fall, leading to a big shortage of concentrate, so I am bullish on copper prices.”

Mr Nelson Pizarro the Chief Executive Officer of Chilean state copper company Codelco said that he expects copper prices to hold between USD 2.80 per pound (0.45 kg) and USD 3.10 per pound over the short- to medium-term, which equates USD 6,171 to 6,832 per ton.

Copper is currently trading at around USD 3.10 per pound.

Mr Shigeru Oi, Chief Executive of JX Nippon Mining & Metals, a unit of JX Holdings said that “The cost structure is increasing. It’s inflation, labor and environmental regulation gets more severe.”

Source :

Posted By : Rabi Wangkhem on Tue, 05 Dec 2017
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