COMMENTARY — Copper market holds its own

There is no question that the copper market this year has benefited from the strong underlying level of demand, particularly from North America where, following two years of strong growth, the consensus was that a slowdown was inevitable this year. Far from it. Although they are subject to revision, preliminary figures from several sources suggest that demand growth in North America in 1994 outstripped that of the previous year . . .

While we believe that demand in North America will remain strong next year, the recent rate of growth is unsustainable, and it will be left to Europe and, to a lesser extent, Japan, to take up the running in 1995. Overall, a further period of exceptional growth is likely next year.

The other side of the coin is, of course, production, and here, too, considerable advances are expected. A significant number of capacity expansions are scheduled to come on-stream in the next three years, and although additions to smelter capacity are not expected to be huge, this will not necessarily be true of mine concentrate or of solvent

extraction-electrowinning (SX-EW) capacity.

By the end of 1996, mine expansions and startups in Chile (Escondida and Candelaria), Indonesia (Ertsberg-Grasberg), North America (Robinson and Louvicourt), Australia (Northparkes, Osborne and Ernest Henry) and elsewhere will add almost 900,000 tonnes of metal in concentrate capacity to that which was available at the end of 1993.

During the same period, some 750,000 tonnes per year (tpy) of SX-EW capacity are scheduled to be commissioned. This is before we include several other projects, in particular El Abra (225,000 tpy) and Radomiro Tomic (150,000 tpy) in Chile, both of which will probably be operating by 1998. The World Bureau of Metal Statistics now publishes data on SX-EW production, and recent reports show that the process’s share of Western mine output rose to 9.8% (8.4% refined) in 1993 from some 8.8% (7.6% refined) in 1990. Even allowing for the planned growth in concentrate output, SX-EW’s share of mine output is likely to be as high as 15% by 1997 and could be approaching 20% by the end of the decade.

— From Billiton Metals’ “Weekly Report” publication.