Copper will continue to lag behind as other commodity prices rebound, FTSE 100 miner Antofagasta has warned, saying the market is likely to remain oversupplied for at least the next three years.
While demand for copper in China, the world’s biggest consumer, will grow at around 3 per cent next year that growth will be outweighed by supply built up during the boom years, according to Iván Arriagada, chief executive.
“What I’m seeing next year is a market that still has a small surplus, but it’s tighter than expected initially,” Mr Arriagada, who took the top job at the Chilean company in April, told the Financial Times. “I still think for the medium-term we will see copper in a slight surplus for this and next year and that won’t change until 2019.”
Copper prices have risen only 5 per cent this year, lagging a recovery in other industrial metals such as nickel and zinc and other commodities such as iron ore and coal. Concern about supplies from new projects, such as the Las Bambas mine in Peru, run by Chinese miner MMG, have put a cap on gains.
“We may see events where the price drops to lower levels, but I think shortlived since there is not a big surplus [of metal],” Mr Arriagada said. “But I still think we’re in a market which is still not out of a condition associated with the down part of the cycle. We need to be cautious about being overly optimistic about it.”
Copper fell 25 per cent last year and is currently trading at $5,065 a tonne — around half its 2011 peak.
Shares in Antofagasta have risen 18 per cent this year, significantly underperforming other miners such as Anglo American and Glencore, which have more diversified portfolios. Antofagasta, 65 per cent owned by Chile’s Luksic family, expects to produce just over 700,000 tonnes of copper this year from its four operational mines.
Mr Arriagada said that progress on new projects in Chile, where around a third of the world’s copper is produced, has been slower than some expected, which could reduce supplies and provide a prop to prices. State-owned producer Codelco needs to spend $17bn over the next four years just to maintain its copper output due to declines in the grade of copper extracted from its current mines, according to Morgan Stanley analysts.
Mr Arriagada said the company remains “vigilant” in looking for future acquisitions but he is not optimistic that good quality copper assets will come on the market. Antofagasta spent $1bn a year ago to buy a 50 per cent stake in the Zaldivar copper mine owned by Barrick Gold.
Since he took the top job, Mr Arriagada has focused on cost-cutting, improving efficiency and using technology such as autonomous trucks and data analysis.
The company will decide at the end of next year whether to go ahead with two projects that could add an extra 200,000 tonnes of production.
Antofagasta has already applied for permits to expand its operations at Pelambres and Centinela, which are expected to be approved in 2017, he said. But the decision whether to push ahead will depend on copper prices, he said.
“We want to be ready,” he said. “And working on those options so we’re ready to activate them at the right time.”
http://ift.tt/2fs3bxZ
Tidak ada komentar:
Posting Komentar