Stable copper market projected

Copper consumption in the Western world will continue to grow around 2% per year during the decade. We (Phelps Dodge) see the strongest growth coming from the Far East as infrastructure needs continue to escalate.

We also see strong growth potential in Latin America and ultimately in the Commonwealth of Independent States.

In fact, we are setting consumption records nearly every year as traditional uses of copper for electrical conductivity and heat transfer expand around the world.

In the high-tech area, we see great growth potential in projects such as the Smart House, smart highways, new electronic applications, telecommunications, the resurgence of electric cars and the increased use of copper in automobiles.

We are also seeing a copper renaissance in the sophisticated new office computer networks. Utility companies are also helping copper consumption by creating and promoting new electrification technology to help consumers save energy.

As I mentioned, the overall outlook for copper is promising. While parts of the world are still going through a recession, we’re already seeing signs of recovery in some areas, such as the U.S.

Keep in mind, too, that world copper inventories are only in the 5-to-6-week range today, compared with the 1982 recession when inventories stood at 13 weeks. So, despite a struggling worldwide economy, we do not have excess inventories as we did in the ’80s.

To summarize my outlook for the rest of this decade: As the world economy improves, I expect a relatively stable copper market during the 1990s, with steady growth in consumption, balance between supply and demand, and relatively stable copper prices.

With that as a backdrop, let’s look at some of the challenges facing our industry going forward. One of the greatest challenges facing not only our industry, but also the entire world is the environment.

At Phelps Dodge, our environmental standards don’t change when we cross borders. Wherever we are, we operate according to standards accepted and enforced in the U.S.

We spend millions of dollars each year not just to comply with regulations, but to exceed them whenever possible. Our facilities are state-of-the-art and our smelters in New Mexico are among the cleanest in the world. Unfortunately, our road is often blocked by government regulations that impose financial burdens on the industry while not always protecting the environment.

In Arizona, we actually improved on nature by constructing a $9 million flood control system at our Morenci mine. We built tow dams and a 7-mile pipeline to collect stormwater runoff from the mountains near Clifton. The first dam, constructed above naturally mineralized terrain, directs the clean mountain runoff through the pipeline, around the mineral deposits and returns it to a creek bed in Clifton.

During periods of heavy rainfall, copper-bearing water that collects in the mine area located above the second dam is fed into a solvent extraction-electrowinning plant.

Our investment was tested recently when we experienced record amounts of rain in Morenci. We had 4.6 inches of rain in January; normally we average about an inch.

Our flood control system performed as efficiently as we had planned. The system collected and stored more than 2.5 billion gallons of excess runoff water. And none of the solutions escaped from the containment system to cause an environmental violation.

— Douglas Yearley, chairman of Phelps Dodge Corp., spoke at the American Metal Market Copper ’93 Forum. The above appeared in a recent edition of “Washington Concentrates” of the American Mining Congress.