Metals News
PDAC-Codelco Sees Tight Supply-Demand Balance
industry news
Mar 7,2011

TORONTO, March 6 (Reuters) - The supply-demand balance for copper will remain tight through 2011 and likely into 2012, though volatility is possible due to Chinese efforts to control inflation, the head of the world's largest copper producing company, Codelco [CODEL.UL], said on Sunday.

Codelco Chief Executive Diego Hernandez said on the sidelines of the Prospectors and Developers Conference in Toronto that China would drive demand, but consumption by some developed countries would help support prices.

"We've seen during this period some price volatility and there could be further volatility as a result of the measures China takes to control inflation," he said.

"But if there is any fall it will be marginal and compensated for by improved demand among developed nation economies."

Copper CMCU3 for three-month delivery on the London Metal Exchange has risen by two-thirds since June, hitting an all-time high of $10,190 per tonne in mid-February on concerns that demand will outstrip production.

Copper, one of the most widely used base metals, is viewed as an economic bellwether due to its industrial versatility. China is the world's largest buyer of the red metal, an essential raw material for the Asian powerhouse's massive urbanization projects.

Hernandez said he was not concerned about substitution of the metal because other uses for copper were evolving.

He said state-owned Codelco would have the capacity to take advantage of booming prices. The company plans to produce some 1.75 million tonnes a year through 2018, when output will start to rise again to 2.1 million tonnes by 2020.

"We don't expect to have years in the interim of lower production, according to our production program," he said.

Earlier Codelco had expected output to decline after 2012 or 2013 as it ramped up production at its massive mines.

Hernandez said the company was pushing ahead with greenfields and brownfields exploration efforts in Chile Brazil, Colombia and Ecuador.


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