More production problems at one of the world's biggest copper mines, first Grasberg, and now Ok Tedi. LME inventories continue their relentless drop:
Yesterday's Inventory
LME Inventory
1/27/2004
Metalprices.com MT Change
Aluminum 1,452,200 250
Al Alloy 64,360 -60
NASAAC 97,620 500
Copper 378,225 -2850
Lead 91,300 -625
Nickel 16,146 -162
Tin 16,050 -25
Zinc 759,600 -50
Asia copper smelters absorb Ok Tedi cut
Reuters, 01.27.04, 11:55 PM ET
By Robin Paxton
SINGAPORE, Jan 28 (Reuters) - Copper production in East Asia will not immediately be affected by an output disruption at Papua New Guinea's Ok Tedi Mining Ltd, a major supplier of their raw material copper concentrate, smelter officials said on Wednesday.
But they said Asian smelters might reduce output forecasts for 2004 if the raw material shortage persisted into the second quarter of the year.
"Maybe we will have to reduce our production. We're now making next year's fiscal budget and are examining the effects of reduced concentrate production," an official at Japan's Sumitomo Metal Mining Co Ltd <5713.T> said.
Ok Tedi Mining, owned 18 percent by Canada's Inmet Mining Corp <IMN.TO>, said on Tuesday it would lose around 40 percent of copper concentrate output for the next eight to 10 weeks after a mechanical failure at one of its mills.
The company produces around 675,000 tonnes a year of copper concentrate, yielding around 200,000 tonnes of copper.
The Sumitomo Metal Mining official told Reuters his company received around 40,000 tonnes of copper concentrate a year in two shipments from Ok Tedi, on a long-term contract basis.
"At this moment, there is no impact at all as the shipments are due in July and November," he said.
Pan Pacific Copper Co Ltd, Japan's largest copper producer, said it bought 80,000 tonnes of concentrate a year from Ok Tedi.
"Ok Tedi said they'd catch up their operations this year and deliver according to our contract," a Pan Pacific official said.
"It's bad news for Ok Tedi too. It's a miner's dream to produce more and more and they won't want this kind of out-time," said an official for the Philippine Associated Smelting & Refining Corp (PASAR), which also buys concentrate on a long-term basis from the mine.
South Korean smelter LG Nikko Copper Inc purchases around 60,000-70,000 tonnes a year of copper concentrate from Ok Tedi, an official for its sister company LG International said.
FREEPORT SHORTAGE
The biggest supply problem facing Asian smelters is the reduction in copper concentrate output at the region's largest copper mine, Freeport McMoRan Copper & Gold Inc's (nyse: FCX - news - people) Grasberg unit in Indonesia.
Freeport said it lowered its forecast for 2004 copper sales from Grasberg to 1.0 billion lb (450,000 tonnes) from 1.4 billion after a rock slide in December damaged the mine.
"Yesterday (Freeport) sent us their estimated delivery quantity and it's about 30 percent less than our contracted tonnage," a Japanese smelter official said on Wednesday.
"It's bad news after bad news. But we can still manage," another copper concentrate buyer in Asia said.
Pan Pacific Copper, a joint venture between Nippon Mining Holdings Group <5016.T> and Mitsui Mining & Smelting Co Ltd <5706.T>, in October lowered its copper cathode output forecast for the fiscal year to March 2004 to 530,000 tonnes, from an earlier estimate of 560,000 tonnes.
Sumitomo Metal Mining will produce around 280,000 tonnes in the same period, its official said. Annual capacity is about 300,000 tonnes.
The PASAR official said the Philippine smelter was still aiming to produce around 170,000 tonnes of LME Grade A copper cathode this year.
"The copper concentrate constraints are a big headache but it's too early to say we couldn't meet our budget," he said.
PASAR is owned around 70 percent by the Switzerland-based trading house Glencore International AG.
South Korea's LG Nikko said in November it planned to produce 500,000 tonnes of copper cathode in 2004 and will run at 26,000 tonnes below capacity between December and June.
Copyright 2004, Reuters News Service |
