[2007-10-16]  Copper prices could still ‘spike’ – analysts
SEVEN Credit Suisse analysts have said that the global copper prices are likely to ‘spike’ or reach the peak next year due to undersupply of the commodity.

Their doubt is based on ongoing global labour and equipment shortages from traditional South American sources and infrastructure and political risks from Central African sources coupled with the need to raise US$ 66 billion up front funding for 66 copper projects.

The analysts have based their conclusion on a study of 66 copper projects that were underway or planned, including Zambia’s Lumwana, Konkola Copper Mine and Mwambashi mining projects.

They have said that although the 66 projects collectively add more than eight million additional tonnes of copper supply by 2015, which is nearly half of the current world level, ‘a significant spike’ in 2008 prices still looms at the level well above $ 3 per pound.

The analysts told Engineering News that there had been growth in demand for copper on average at 3.9 per cent a year for the past ten years, but new 2008 supply would only feed an additional 2.3 per cent into the market.

The seven pundits also project that the demand supply position could be reversed and estimated that global copper demand would need to grow higher than 4.3 per cent a year to keep the market tight.

They also believe that many of the projects could be delayed and estimated that long-term supply growth could reduce to only 3.6 per cent a year, 0.3 per cent below the average since 1997.

“While new DRC and Zambian Projects have less than half of Chilean and Peruvian Reserves, their average grades are two to eight times higher and their capital intensity is at a quarter of the South American Level.

The analysts further observed that the average capital intensity of the Zambian projects and the Democratic Republican of Congo was $4 568 per tonne in the next five years, which is 25 per cent lower than Chile or Peru.

But, they said the new central African supply will present a difficult proposition due to political risk and infrastructural inadequacy.

Projects cited were the Mwambashi project in Zambia, a joint venture between Teal and Korea Zinc Company in Zambia as one of the project that has deposits that contains 209,000 tonnes of contained copper at an average grade of 2.43 per cent and was scheduled to produce its first copper by the end of 2008.

The small-scale project would have an annual capacity of 15,000 tonnes of copper metal.

At Lumwana project, Equinox Minerals says that the deposit contains 2.7 million tonnes of copper metal at 0.73 per cent copper grades.

The project is currently under construction and management intends to start commercial production from mid 2008.

It estimates that the average annual production for the first six years from the deposit would be 160,000 tonnes of copper metal. The mine life is 37 years.


Source: © 2005 Zambia Daily Mail.