Even though worries over Chinese demand
Such predictions explain why big UK miners are talking up their growth potential in copper, even though worries over Chinese demand have driven the price of the metal to its lowest since 2010.
Both Rio and BHP believe the copper market is oversupplied now but will tighten from 2018, with growing deficits. “The copper story remains very strong,” says Mike Henry, BHP’s president for marketing.
Some of the UK’s pure-play copper miners are investing heavily in growth. Antofagasta expects to lift annual output from its Chilean mines from 700,000 tonnes last year to 900,000 tonnes by 2018. Kaz Minerals is building two mines in Kazakhstan.
For BHP and Rio, copper is especially important now that investments in sectors such as iron ore and coal appear to be coming to an end. Iron ore is heavily linked to Chinese infrastructure construction that is expected eventually to tail off, and coal could be threatened by changing environmental rules. Demand for copper is expected to be steadier: it has a wide range of applications and is forecast to be widely needed as the world’s largest economy shifts towards more consumer-led growth.
But the complexity and expense of projects means the larger miners may not be in a position to generate a quick acceleration of copper output.
Patrick Jones, an analyst at Nomura in London, says: “The major diversified miners all have sizeable copper businesses but they all have predicaments of one kind or another when it comes to their future growth options.”