Copper prices to remain high for 2-5 years
Copper prices to remain high for 2-5 years
Leony Aurora, The Jakarta Post/West Sumbawa
With the pace of global demand, especially from China, currently
outstripping that of supply, copper prices are estimated to
remain high for the next two to five years, a major player
claims.
PT Newmont Nusa Tenggara's (NNT) finance director Dan
Desjardins said that copper prices were showing an extraordinary
spike right now, riding at an all time high of around $1.50 a
pound.
"In the last 10 years or even 20 (years), the price of copper
has averaged some 92 U.S. cents a pound," he said at the firm's
compound in Batu Hijau in Sumbawa island, West Nusa Tenggara.
The average price of copper produced by NNT for the
international market last year was $1.33 a pound, more than 50
percent higher than the average price the year before of 86 U.S.
cents per pound.
"I believe copper has excellent fundamentals over the next two
to five years and should do very well," Dan said.
The main reason for the price rise is a trade imbalance, with
demand from China, the world's largest consumer of the metal,
climbing rapidly over the last four years, while there has been
no significant increase in supply.
"There aren't any new big (copper) mines coming up," said Dan.
"For the next six months, it (copper prices) literally could stay
at $1.50 (a pound)."
Last year, NTT's copper output of 718 million pounds accounted
for about 3 percent of world demand.
In the long run however, as copper prices keep rising,
consumers may try to replace the metal with other materials, like
aluminum or plastics, which would eventually put downward
pressure on the price of the metal.
"I can't really see it going much higher," Dan said.
Copper is used in electrical wiring in vehicles, as well as in
homes and for power cables.
China has aggressively expanded its market worldwide, flooding
Asian countries with cheap motorcycles and electronic products.
Indonesia has two major copper producers, namely NNT with its
Batu Hijau open-pit mine, and PT Freeport -- the larger of the
two -- which operates a huge gold and copper mine in Papua.