Copper above $1.00 by 2000 - Chile Mining Minister
By Robert S. Elliott
biz.yahoo.com
Tuesday April 7, 6:15 pm Eastern Time
BUENOS AIRES, April 7 (Reuters) - Copper will rise from its current low international market price to above $1.00 per lb by 2000, Chile's top mining official said.
''For sure in the year 2000 the price of copper will be over $1.00,'' Chilean Mining Minister Sergio Jimenez told Reuters.
''Of course that's relative,'' he added, noting that if there was another financial crisis such as the one currently affecting Asia the market would once again be hurt.
Copper prices have plunged from a high of $1.35 per lb last June to Tuesday's close of $0.77 per lb on the New York Copper Exchange. They should rise to more than $0.90 per lb before the close of 1998, Jimenez said.
''With current trends, by the year 2000 there will be significant increase in consumption and the price will go up a lot,'' Jimenez said. ''Mining is a long-term activity, so you have to look at prices in the long term.''
The existing financial crisis in Asia and the potential recession in Japan are largely responsible for the copper market doldrums, he said.
Chile, which produces 28 percent of world's copper, has been largely unaffected by the metal's fall from grace, the minister said.
''There is no decline in (copper production) activity in Chile,'' he said. ''There is a decrease in Australia, Africa, Canada and the United States, in that order.''
Canada's Cambior Inc. (CBJ.TO - news) recently announced it had frozen plans to proceed with the El Pachon copper project on the Argentine-Chilean border, along with the La Granja project in Peru and a $100 million development in the U.S. state of Arizona.
Australia's BHP Copper (BHP.AX) decided in February to scale back copper production at its Pinto Valley mine in the United States to about 16,000 tonnes a year from 85,000 tonnes because of the weak prices.
In Chile, other metals such as gold have seen production fall because of lower prices.
''Gold production has dropped steeply, but gold is only a marginal product in Chile and doesn't have the same significance as copper,'' said Jimenez.
Chile's ''only defense'' against slumping copper prices is the low cost of doing business, said Jimenez.
''We have cheap electrical energy, good roads, good production capacity, abundant laws and a good workforce,'' said Jimenez.
According to a recent Colorado School of Mines study, projects in Chile and Argentina offer the highest after-tax rates of return.
Currently there is excess copper production of about 400,000 tonnes per year out of total world output of 14 million tonnes, Jimenez said.
However, consumption is always threatening to climb, he said, particularly in China and India, which represent ''half the world's population'' but where copper use is ''less than one kilogram per capita.''
In comparison, the average Chilean uses an average of eight kilos of copper.
''The danger is not an excess of copper, but a lack of production,'' said Jimenez.
China's copper industry is expected to grow by six percent annually over the next five years driven by more demand and consumption, Kotaro Tomino, assisant general manager of Jinlong |
