China to fuel world copper demand

Agence France-Presse
China buys 38% of the world's copper, making it by far the world's biggest purchaser

SANTIAGO – China will continue to lead global demand for copper while Latin America will remain the world’s biggest supplier, economic analysts said.  

China increasingly needs copper as it expands its intensive urbanization and industrialization programs in a country where half its population still lives in rural areas.

While the recent volatility on world markets has raised fears about China’s booming economy, analysts at the World Copper Summit in Santiago did not believe that will dampen the Asian giant’s thirst for the metal.

“Demand will not change long-term,” said Andrew Harding, chief executive officer of Rio Tinto Copper, pointing to the need for social housing and upgrading electrical system.

As a result, copper prices are expected to remain high.

In the past 20 years, copper demand in China has grown at a rate of 13.6% and although it is expected to slow in the coming years, growth will continue, said Diego Hernandez, chief executive of Chile’s state-owned copper mining company Codelco.

Codelco is the world’s leading producer of copper, supplying about 11% of the world market.

“Going forward we expect slower growth, of around 7%, which from a base as high as the one from China today, represents significant amounts,” Hernandez said.

China buys 38% of the world’s copper, making it by far the world’s biggest purchaser.

Meanwhile, huge investments in Latin America’s copper production are expected to maintain the position of countries like Chile and Peru as industry leaders.

About $300 billion is expected to be invested in Latin American mining projects by 2020, according to the InterAmerican Society of Mining.

Chile will hold on to its 30% share of world copper production based on planned investments of $91.455 billion by 2020, said Chilean Mining Minister Hernan de Soliminihac.

About 77% of the mining investments will be for copper extraction, Soliminihac said.

Peruvian mining investments are expected to exceed $50 billion in this decade.

Some analysts and government officials warned about political obstacles that could interfere with mining projects.

Local residents and environmentalists concerned about damage from the mines could depress growth for the copper industry, they said.

“There are many risks,” said mining industry analyst Vanessa Davidson. “In Peru, for example, local community opposition has been an important issue that is causing delays” in projects.

In Chile, the controversy focuses on the environmental effects of energy projects, which are crucial for mining operations. The mining industry uses about 37% of Chile’s electricity.

The Chilean mining industry projects that its energy consumption will increase 44% by 2017.

Without the planned expansion of electrical output, mining projects are likely to be delayed, according to industry officials.

Chilean Minister of Environment Ignacia Benitez said employers should “involve” indigenous communities in projects that affect them. She also said the indigenous residents should be kept informed “because their participation is increasingly important.”

Some industry officials said the planned mining projects might be too ambitious.

“If all the projects that have been announced in the world are done, they probably will create a surplus and this would affect prices,” which would fall, said Codelco’s Hernandez.

About 500 industry executives and government officials attended this year’s World Copper Summit, which was wrapping up Wednesday, April 18. – Agence France-Presse