Chile expects world copper glut 1996-2000

Chile expects world copper glut 1996-2000

SANTIAGO (Reuter): World copper supplies will swing from a
shortage this year to a glut for the rest of the decade thanks to
steep rises in production especially from Chile and Indonesia,
said the Chilean Copper Commission, Cochilco.

"The growth in Chilean production is very opportune," said
Aldo Picozzi, head of market research at Cochilco.

"The mines will benefit from good prices but not upset the
balance of the market in the medium term," Picozzi told a news
conference Thursday.

Cochilco estimates the world copper market will end this year
with a deficit of 206,000 tons, far lower than 1994's shortfall
of nearly 500,000 tons, he said.

Booming world output, led by a new generation of mega-mines in
Chile's desolate Atacama Desert, combined with a slowdown in
growth in demand in the United States and Europe will lead to a
steady fall in copper prices in the rest of the decade, he said.

Cochilco studies show copper prices, which have averaged $1.33
a pound this year, will fall to between $1.15-$1.20 next year and
to $1.00-$1.05 in 1997.

Picozzi said prices will be in the $0.95-$1 range from 1998 to
the end of the century.

Lower prices will not affect the viability of Chile's new
mines, most of which are being built with low-cost solvent
extraction/electro-winning (SX-EW) technology, said Picozzi.

"Prices are still good as costs are going down," he said. "The
new SX-EW mines will improve Chile's competitiveness."

The SX-EW process, also known as heap-leaching, involves
pouring sulfuric acid over mineral to extract the copper ore, by-
passing the traditional concentrator and smelter.

Half

With new SX-EW mines including Cyprus Amax's El Abra pit and
state-owned Codelco's Radomiro Tomic mine coming on stream in the
next three years, Chile will account for over half world
production of electro-won cathodes by 2000.

The main Indonesian project in this period is the expansion of
the Ertsberg copper mine.

Cochilco estimates refined copper supplies in the western
world will rise seven percent in 1996, with growth slowing to 2.5
percent a year.

The exception is in 1998 when output will rise by more than
3.5 percent as projects including the giant Collahuasi mine,
owned by Canada's Falconbridge and Minorco, come into production.

Collahuasi, which lies on a high desert plateau near the
border with Bolivia, will churn out 380,000 tons of copper a
year.

Chile, already the world's largest copper producer, will see
output doubling from 1994 levels to over 4.2 million tons by the
end of the decade.