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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (948)	10/13/2004 7:35:22 PM
From: Stephen O	Read Replies (1) \| Respond to of 2131

No let-up in Chinese copper demand - Phelps Dodge -------------------------------------------------------------------------------- Measures taken by the Chinese government this year to cool its overheated economy did not suppress the appetite of the most populous nation for copper to feed its construction boom, the chief executive of no 2 copper producer Phelps Dodge said. Phelps Dodge chairperson and CEO Steven Whisler also said India had the potential to be as important a copper-consuming country as China in the "five- to 15-year range," adding that he was very positive on the market for the red metal going forward. Whisler told Reuters on Tuesday that China, indeed much of Asia, was key to a pick up in global demand that has been a "huge" positive for the Phoenix, Arizona-based company, fueling a rise in copper prices to their highest level in almost 16 years this week. "In many of the sectors we serve in terms of basic infrastructure, power, utilities, etcetera, (we) have seen no slowdown whatsoever," said Whisler, who was in London for London Metal Exchange Week. Phelps Dodge releases third quarter results later this month. In the second quarter Phelps Dodge reported net income $226,6-million, versus a loss of $15,2-million a year earlier. Phelps Dodge sees stronger demand for copper in all parts of the world. "That bodes well for a pretty good cycle," Whisler said. He said the company was trying to grow on an orderly path, rather than responding to strong demand and tight copper supplies by cranking up production. Whisler said that Monday's announced approval for tripling of production at Phelps' Cerro Verde mine in Peru by 2007 was one of its several high-quality growth projects. Cerro Verde will ultimately produce 300 000 short tons of copper and should be a significant contributor to Phelps Dodge earnings for the next three to four decades, regardless of the copper price, he said. Within two to three years, the company hopes to produce about 125 000 t from a project in Safford, Arizona, about 20 miles southwest of its Morenci Mine. In China, Phelps Dodge has three wire and cable facilities and is having ongoing discussions with key players in the Chinese copper industry and mining sector. "And given the size of our moly book, we also have similar relationships with a number of Chinese moly producers," Whisler said referring to molybdenum, a mineral used in alloy to harden steel. The company has been exploring in India for about five years. "In general we have not made any discoveries there. So I think the real potential from our perspective is clearly on the demand side," its CEO said. Whisler contrasted the current buoyant copper market - prices recently topped $3 050 a ton for the first time since 1989 on the LME -- with previous strong-price environments, noting that there is "clearly not the backlog of what I call 'mega projects' that existed in the late 1980s and early 1990s." "I think the second big influence is the speculative element that is clearly in the market today," he said. "Speculators have always been in the commodities market. So that's nothing new. What is new is the tremendous amount of funds that hedge funds have brought into the market." He said the fund involvement probably caused copper prices to swing more wildly this year than they have historically. - Reuters.