Copper Mines Unable To Support Demand Growth At Current Rates - Rio Tinto
October 12 2010 - 9:05PM
Dow Jones News
Planned copper mining projects will be unable to support demand
growth at current rates and could see the market for mined copper
in deficit for most of the next decade, Rio Tinto Ltd. (RTP) said
Tuesday.
In slides presented at an industry conference in London, Matthew
Holcz, general manager, business development of Rio Tinto Copper,
saw production from probable copper mining projects as only able to
support annual demand growth of 3% a year by 2020.
If demand for mined copper grows at 5% a year, the market won't
go back into surplus by 2020 even if all probable greenfield
projects go into production, pushing mined copper output from the
current level of around 16 million tons to more than 22 million
tons.
Around 80% of global copper consumption comes from mined
sources, with the balance made up largely from scrap recycling.
In a report earlier this month, the International Copper Study
Group estimated demand for the red metal will rise by 3.81% in 2010
and 4.49% in 2011.
Rio Tinto is one of the world's biggest copper miners, with
non-controlling stakes in Escondida in Chile and Grasberg in
Indonesia, the world's two largest copper mines, and 100% ownership
of the Bingham Canyon mine in Utah, historically one of the world's
most productive copper mines.
The company also has stakes in Mongolia's Oyu Tolgoi project,
seen as the world's best undeveloped copper-gold project, and
Alaska's Pebble prospect, the world's largest undeveloped copper
resource.
Holcz said that less than half of the world's copper supply in
2020 will come from low-risk regions, compared to nearly two-thirds
in 2000. High-risk regions will account for 9% of global supply, he
said.
Ore grades will also continue to decline toward 1% contained
copper, although at a slower rate to 2020 than over the past few
decades, while major new copper discoveries are increasingly deep
below the surface.
Copper is seen as a barometer of global economic health but its
rise to the highest levels since July 2008 has come despite renewed
concerns around global economic growth.
Analysts believe that the weakening U.S. dollar--which raises
the cost of dollar-denominated commodities--concerns about the
performance of paper currencies, and expectations of a supply
deficit from next year have driven the metal's rise. Three-month
copper futures traded on the London Metal Exchange were $8,340/ton
at 0015 GMT Wednesday.
Average per person consumption of the metal will rise from
around $12 to around $16 by 2020, Rio Tinto estimates. Consumption
in developed economies plateaus around the $25-a-head level.
-By David Fickling, Dow Jones Newswires; +61 2 8272 4689;
david.fickling@dowjones.com