Copper metal investment: Copper mines would not meet demand growth - Rio Tinto

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Copper has been in use at least 10,000 years, but more than 95% of all copper ever mined and smelted has been extracted since 1900. As with many natural resources, total amount of copper on Earth is vast (around 1014 tons just in the top kilometer of Earth's crust, or about 5 million years worth at the current rate of extraction). However, only a tiny fraction of these reserves is economically viable, given present-day prices and technologies. Various estimates of existing copper reserves available for mining vary from 25 years to 60 years, depending on core assumptions such as the growth rate.[36] Copper is a finite resource, but, unlike oil, it is not destroyed and therefore can be recycled. Recycling is a major source of copper in the modern world. As consumption in India and China increases, copper supplies are becoming scarcer.[37] The copper price has quintupled from the 60-year low in 1999, rising from US$0.60 per pound (US$1.32/kg) in June 1999 to US$3.75 per pound (US$8.27/kg) in May 2006, where it dropped to US$2.40 per pound (US$5.29/kg) in February 2007 then rebounded to US$3.50 per pound (US$7.71/kg = £3.89 = €5.00) in April 2007.[38] By early February 2009, however, weakening global demand and a steep fall in commodity prices since the previous year's highs had left copper prices at US$1.51 per pound.[39] The Intergovernmental Council of Copper Exporting Countries (CIPEC), defunct since 1992, once tried to play a similar role for copper as OPEC does for oil, but never achieved the same influence, not least because the second-largest producer, the United States, was never a member. Formed in 1967, its principal members were Chile, Peru, Zaire, and Zambia.

Saturday 16 October 2010

Copper mines would not meet demand growth - Rio Tinto - 16 Oct 2010

Posted by PRECIOUS-METAL-INVESTMENT 09:03

Saturday, 16 Oct 2010
Rio Tinto Limited said that planned copper mining projects will be unable to support demand growth at current rates and could see the market for mined copper in deficit for most of the next decade.

In slides presented at an industry conference in London, Mr Matthew Holcz GM business development of Rio Tinto Copper saw production from probable copper mining projects as only able to support annual demand growth of 3% per year by 2020.

If demand for mined copper grows at 5% per year, the market won't go back into surplus by 2020 even if all probable Greenfield projects go into production, pushing mined copper output from the current level of around 16 million tonnes to more than 22 million tonnes. Around 80% of global copper consumption comes from mined sources with the balance made up largely from scrap recycling.

In a report earlier this month, the International Copper Study Group estimated demand for the red metal will rise by 3.81% in 2010 and 4.49% in 2011.

Mr Holcz said that less than half of the world's copper supply in 2020 will come from low risk regions compared to nearly two thirds in 2000. High risk regions will account for 9% of global supply. Ore grades will also continue to decline toward 1% contained copper although at a slower rate to 2020 than over the past few decades while major new copper discoveries are increasingly deep below the surface.

Copper is seen as a barometer of global economic health but its rise to the highest levels since July 2008 has come despite renewed concerns around global economic growth.

Analysts believed that the weakening US dollar which raises the cost of dollar denominated commodities concerns about the performance of paper currencies and expectations of a supply deficit from next year have driven the metal's rise. Three month copper futures traded on the London Metal Exchange were USD 8,340 per tonne at 0015 GMT.

Average per person consumption of the metal will rise from around USD 12 to around USD 16 by 2020, Rio Tinto estimates. Consumption in developed economies plateaus around the USD 25 per head level.

http://www.steelguru.com/metals_news/Copper_mines_would_not_meet_demand_growth_-_Rio_Tinto/170216.html

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Saturday 16 October 2010

Copper mines would not meet demand growth - Rio Tinto - 16 Oct 2010

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