SANTIAGO, Chile--The price of copper may have found a bottom,
even as the market for the beaten-down industrial metal faces its
first supply glut in four years, the chief executive of Chilean
miner Antofagasta PLC (ANTO.LN) said Monday.
Prices for copper, which have fallen more than 9% this year, may
have already seen the worst of a slowdown in China, the world's
largest consumer of the industrial metal, Antofagasta Chief
Executive Diego Hernandez said in an interview with The Wall Street
Journal.
"At least in the short term, there is no reason why copper
should go any lower," the former chief executive of state-owned
Chilean copper miner Codelco said.
Antofagasta has no plans to shut any of its mines ahead of a
surplus the company estimates could be between 300,000 and 400,000
tons this year and persist until at least 2015, Mr. Hernandez
said.
Mr. Hernandez is joining other top mining executives, among them
Codelco CEO Thomas Keller, Anglo American PLC's (AAL.LN) head of
copper Hennie Faul and Rio Tinto PLC (RIO) copper chief
Jean-Sebastien Jacques, at the 2014 Cesco copper conference in
Chile, the world's biggest producer of the metal.
London-listed Antofagasta, 65%-owned by the Luksic family, saw
its earnings slump by more than a third last year, after a sharp
fall in the metal's price offset the company's increased
production. Still, the company plans to spend $3 billion on three
key projects between now and 2018, in a bid to boost its copper
production to 900,000 metric tons, from 721,000 last year, it said
on March 18.
"If the price of copper goes up, we want to be there in a big
way," Mr. Hernandez said.
Copper prices fell to a three-and-a-half year low last month, as
the first Chinese domestic corporate bond default sparked fears of
instability in the country's banking system. Some Chinese companies
use copper to obtain low-interest loans and invest the funds in
higher yielding local instruments. Some investors believe falling
copper prices could spark a downward spiral in the market, where
borrowers are forced to sell more copper to cover losses or raise
money.
Such a scenario is unlikely, Mr Hernandez said, as the recent
drop has demonstrated companies are more than willing to hold on to
their copper, even amid a drop in prices.
"We have not seen inventory coming back in the market, even
though prices went down," he said.
He said it was to early to gauge how tax hikes by newly-minted
Chilean president Michelle Bachelet will effect the mining
industry. Ms. Bachelet's pledge to boost corporate taxes to 25%
from 20% in a bid to address income inequality has met opposition
from some businesses, who say it will hurt growth and cool
investment in the South American country.
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