SX-EW process changes copper industry

Changes are taking place in the copper industry with the emergence of solvent extraction-electrowinning (SX-EW) processing, a technique which allows companies to produce cathode copper at the mine site without the need for smelters or refineries.

In a recent study entitled Copper: Market Update, Analysis and Outlook, Roskill Information Services says SX-EW copper production accounted for 10% of mine production in 1994, compared with only 3% a decade ago.

In the past, custom smelters and refiners controlled the export concentrate market and dictated the charges associated with the treatment of concentrates. This control is now diminishing, and Roskill says corporate control of the industry is also changing now that a number of junior companies have applied SX-EW technology to bring smaller oxide deposits into production.

The London-based firm says that as much as 45% of the new mine capacity coming on stream over the next five years will be from Chile, and more than half will be treated by SX-EW.

As for overall supply, the United States has the second largest mine production, but output is declining as American companies focus their attention on better opportunities offshore. Asia and the Pacific region are experiencing the highest growth, while the CIS, the third largest producer, is desperately trying to maintain current production and attract foreign investment.

Overall mine production declined in 1994. But on the demand side, Roskill says 1994 was “an unusual year”, with a very high growth rate of consumption of 5% over the previous year (the highest this decade). Of particular note, U.S. copper consumption rose 15% over the previous year as a result of good growth in the construction industry, car sales and industrial production. Copper rod, which is used mainly in the production of wire for electrical cables, is the focus for expansion and leads the growth.

The strong growth in copper consumption in 1994, combined with a drop in mine output, led to a reduction in inventories, and copper prices firmed as a result. Despite the possibility of short-term market volatility, the copper price is expected to avoid the “boom bust” cycle. Roskill forecasts that it will remain at about US$1.05 per lb. in 1995, but will fall slowly during 1996, receding to below US$0.90 per lb. in the following two to three years.