Codelco Says 2005 Copper Price May Average Over $1.30 (Update2)
2005-04-13 14:55 (New York)
(Adds price history averages in sixth paragraph.)
By Heather Walsh
April 13 (Bloomberg) -- Codelco, the world's biggest copper
producer, said copper prices may average over $1.30 a pound in
2005, as demand grows in China, the biggest user of the metal.
Average copper prices this year may more than match the
average of $1.30 a pound last year, Codelco President Juan
Villarzu told reporters after a speech. Copper prices closed at
$1.525 a pound on April 11, the highest level since March 1989.
``We have the lowest stockpiles in memory,'' Villarzu said
during the speech to mining executives in Santiago. There's ``a
strong increase in demand and usage in China.''
Codelco may accelerate plans to increase production, a
measure that would require the company to boost annual investment
to as much as $2 billion, Villarzu said. The government needs to
consider new ways to fund Codelco's investments, including
through the sale of a minority stake, Villarzu told reporters.
That step would require approval of the nation's congress.
Codelco is fully owned by the government.
``The country will have to confront the discussion of
opening Codelco to the market,'' Villarzu said. ``Our main
restriction is a restriction of financing.''
Prices for the metal in New York so far this year have
averaged $1.4519 per pound, up from $1.2833 per pound last year.
Outlook
The government also could reduce its dividend payments from
Codelco to provide the company with more cash, Villarzu said. For
now, Codelco is looking at ways to guarantee supplies of copper
to clients in exchange for financing.
Codelco is still in talks, begun last year, for such an
accord with state-run China Minmetals Corp., Villarzu said. China
is the biggest buyer of Codelco's copper.
Copper futures for May delivery fell 3.65 cents, or 2.4
percent, to $1.4595 a pound on the Comex division of the New York
Mercantile Exchange.
Codelco has sold debt in the last three years to help fund
spending, one of few sources of funds for new projects, said
Deneb Schiele, an analyst at Feller-Rate Clasificadora de Riesgo
in Santiago said. Codelco contributed $3.3 billion last year to
government coffers.
``They have a limited budget,'' Schiele said. ``It's more
complicated to do aggressive expansions.''
Villarzu said that the company may seek to expand production
to 3 million metric tons in 2020. The company, which has 17
percent of the world's copper reserves, produced 1.84 million
tons in 2004.
The company said last month that it plans to sell $200
million of bonds in Chile to buy a smelter this year, part of
about $1.4 billion of planned investment in 2005.
--Editor: Jameson. |
