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.