UPDATE 1-Codelco Sees Healthy China Copper Demand

SHANGHAI, Aug 5 (Reuters) - China's copper demand is expected to grow at 8 percent this year from last year, and at a similar pace next year, a senior executive of Chile's Codelco, the world's largest copper producer, said on Thursday.

"The growth of demand in China is practically unstoppable," Rodrigo Toro, corporate senior sales vice president of Codelco, told reporters on the sidelines of a meeting with clients.

Toro said Beijing's tighter monetary policy was a healthy dose to control the country's breakneck growth.

"We are happy to see the demand in China will continue at very healthy rate, not as big as would be at 12 percent GDP growth, because producers would not be able to respond to that additional demand."

He said the global copper demand growth would be 4 percent this year, but added it might improve next year if the economy picked up pace.

Codelco produced 1.782 million tonnes of copper in 2009, up 16 percent from a year earlier, after years of dwindling output.

The company expected to maintain the same level of output this year as well as in the next two years, its chief executive Diego Hernandez, told clients earlier.

The company said earlier this year that it planned to invest $3 billion each year for the next five years to revamp century-old mines and exploit new deposits as part of its plan to lift output to around 2 million tonnes of copper per year.

EXPANSION PROJECTS

Ninety percent of Codelco's copper production is in the form of cathode, but the ratio of copper concentrate is expected to rise in the next 7 to 8 years after the expansion projects at Mina Ministro Helas and Andina mines are executed.

Toro said the company will focus on resources in Chile, rather than venturing overseas, in the period.

"We would be impractical to be thinking of additional projects in the next five years," he said.

Toro declined to forecast term premiums for next year, but said if based on current situation in the market, term premiums should rise for 2011.

Chinese merchants are keen to build copper stocks in the next few months through bargain-hunting, fed by expectations term premiums to China for shipments next year will rise to over $100 over cash LME prices MCU0 for Chilean refined copper cathode imports, up 18 percent from this year's $85 level. 

Copper treatment fees, also known as TC/RC, were expected to remain at low levels, Toro also said.

"Treatment charges for copper concentrate will remain extremely low for quite some time. The overcapacity in smelting and refining is so big that the demand for concentrate will exceed largely the possibility of supply of copper concentrate," he said.