Copper prices have moved up a little the last few days, after nearing $2.05/lb during the past week. But news from two countries this week suggests caution is the word for the red metal.
One of these spots to watch is Peru. Where officials announced a major increase in copper production — and forecast that the coming year will see an even bigger rise in output.
Local press reported Friday on stats from Peru’s central reserve bank, showing that the country’s October copper production was up 34.8% as compared to October 2014. Related: Outlook For Oil In 2016 Still Grim
The rise reportedly came mainly from two sources: the Constancia mine commissioned earlier this year by HudBay Minerals. And increased output from Antamina mine owned by Teck Resources, BHP Billiton, and Glencore.
That’s a big jump in national output. And Peruvian officials this week said there’s a lot more coming.
The country’s minister of energy and mines Rosa María Ortiz was quoted in local press saying that Peruvian copper production will jump 65.5% in 2016 — to an expected 2.5 million tonnes of metal for the year.
That comes as the Las Bambas mine — developed by China’s MMG — is expected to start first production in February. With 2016 output forecast at 250,000 to 300,000 tonnes, ramping up to 400,000 tonnes in 2017. Related: America’s Top Shale Gas Basin in Decline
And that wasn’t the end of new copper announcements in this part of the world. With Peru’s neighbour Ecuador also saying it has started up a new copper mega-project this week.
Ecuador’s government announced Monday that development has officially begun at the Mirador project — also operated by a Chinese firm, Ecuacorriente.
First production from Mirador is expected in 2018, with output here also being significant — at an expected 370,000 tonnes of copper per year. Related: Hydricity: Power Source of Future?
All of which suggests there’s a steady and growing stream of new copper production coming from this world-leading region — even at today’s prices. It’s of course likely much of this new supply will be headed back to China, but even so the dampening effect on global prices could be notable.
This raises the issue of whether other big end users of copper like Japan and Korea will intensify their search for competing supply sources (Japanese government firm JOGMEC just happened to be in Chile this week for meetings with the country’s Copper Commission). Watch for developments across South America and beyond.
Here’s to big dreams
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By Dave Forest
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