World's copper output must rise as Chile's dips, says BHP
October 19, 2004
By Matthew Craze
London - Global copper production would need to rise by about 250 000 tons a year to meet demand as output growth slowed in Chile, the world's largest supplier, according to BHP Billiton, the world's biggest mining company.
Diego Hernandez, the president of BHP Billiton's base metals division, said: "You wonder where the copper will come from. We are looking everywhere."
Copper, which is used mostly in electrical wiring and cables, surged to a 15-year high on October 8 as demand, led by China, outpaced production from mines and scrapyards and as inventories plummeted.
Hernandez said mining companies would not catch up with demand until the second half of 2005.
Melbourne-based BHP Billiton is spending $20 million (R129 million) this year on copper exploration, some with smaller companies in South America, Africa and Asia.
It is also working with Chile's state-owned Codelco to develop a way to unlock copper from the country's copper sulphide reserves.
BHP Billiton earned a record $2.04 billion in the six months to June, benefiting from rising prices for oil, coal and metals.
"It's a good time to invest," said Hernandez, who is based in Santiago. He previously worked in Chile for Anglo American, the world's second-biggest mining company, and oversaw construction of the first copper mine in the Amazon jungle for Vale do Rio Doce, Latin America's biggest mining company.
A 3 percent annual increase in demand would require an additional 150 000 tons of copper a year, Hernandez said.
Another 100 000 tons a year would be needed to make up for a fall in the amount of copper found in ore from existing mines, he said.
The International Copper Study Group said recently that the gap between mine output and demand would shrink next year to 220 000 tons from 701 000 tons as production increased 7.3 percent to 17.2 million tons.
BHP Billiton owns 57.5 percent of Escondida, the world's biggest copper mine, in Chile's Atacama Desert. Construction of the $1 billion Spence project nearby would lift BHP Billiton's copper output to 1.4 million tons a year by 2008, rivalling Codelco as the biggest producer.
"Chile will have difficulties keeping its market share," Hernandez said. Two decades of exploration in the country's northern Pampas area had reduced the likelihood of the discovery of a large copper deposit.
Peru, Chile's neighbour, was a leading area for growth, Hernandez said. |
