Copper Mine Supply Could Lag Demand Growth - Macquarie
May 25 2009 - 11:54PM
Dow Jones News
Copper mine supply could struggle to match forecast demand
growth in the period to 2013, Macquarie Bank said in a report dated
Tuesday.
The bank said copper demand was expected to be 4 million metric
tons higher in 2013 than 2009, implying that a significant number
of new mine projects will need to come onstream to balance the
market.
"There is little margin for delays and disruption, and it is
fairly easy to make a case for the copper market being very tight
at some stage over this period," said the report.
Macquarie noted that well known mega-projects like BHP
Billiton's (BHP) Olympic Dam will not come onstream until the
middle of the next decade, leaving supply dependent on smaller
mines.
"Overall, what we find is that there is only a very small number
of large expansions committed for the next five years, and the
largest are in the 100,000-200,000 tons per annum range," it
said.
The bank said there are a large number of smaller-scale projects
that have the potential to fill the gap, but there is little
visibility on whether these mines, currently in the possible or
probable categories, will come onstream in time.
"The collapse in prices in the fourth quarter of last year and
the lack of available funding since that time have put many of
these projects on the back burner, and whether they can be brought
into production in time to meet demand is questionable."
The bank said that around half the new mine supply will come
from Latin America and around a quarter from Africa, with the rest
of the world supplying the balance.
-By James Campbell, Dow Jones Newswires; 65-64154-082;
james.campbell@dowjones.com