Market balances to 2005 for copper concentrates

No new greenfield copper smelters, including those currently planned or under construction, are required in the Western World until the end of the 1990s, according to a recent report prepared by British research firm Brook Hunt & Associates.

Existing smelters are committed to adding 1.1 million tonnes to their present capacity through incremental expansions and a further 435,000 tonnes per year of blister production will arise from higher capacity utilization at certain other smelters. In addition, an extra 600,000 tonnes of low-cost, solvent-extraction and electrowinning production will enter the market in the 6-year period 1992-98.

This output, equivalent to four new smelters, will directly displace conventionally smelted and refined copper. Nor will the Western World require any new sulphide mine capacity until 1997 over and above that already under construction or fully financed, the analysis thus excluding a number of major sulphide projects like Collahuasi, Chuqui Mansa Mina, Salobo and additional expansions at Grasberg.

These are two of the conclusions to emerge from Brook Hunt’s latest assessment of the market balances for copper concentrates and blister/anodes through to 2005. The study sets out why there will be surplus smelting and electro-refining capacity all through the 1990s and what the implications will be for the buyers and sellers of concentrates and blister/anodes. On why concentrate stocks are being run down so rapidly, Brook Hunt says one reason is because of sharply higher exports to smelters in the Commonwealth of Independent States (CIS), Eastern Europe and China. In 1990, concentrates containing just 70,000 tonnes copper were exported to this group of countries, of which nearly all went to China.

About 280,000 tonnes of contained copper are estimated to have been shipped last year to Eastern Europe, with 105,000 tonnes going into the CIS, 78,000 tonnes to China and the balance to Czechoslovakia, Romania, Bulgaria and Poland. Exports should fall in 1993 and 1994 because of lower shipments to the CIS and Poland. Beyond 1994, exports to China will increase by more than 50%, to 130,000 tonnes of contained copper per year as smelter expansions come on stream.

Including probable custom smelter expansions, exports to China could easily rise to 190,000 tonnes of contained copper per year by the late 1990s. For the CIS, Brook Hunt is assuming that by 1994 the introduction of free-market economics, and more importantly, pricing, will be so far advanced in certain crucial areas of the economy, such as transportation and energy, that costs will begin to approximate those typically found in the West. As a result, the importation of custom feed over long distances will become far less attractive and will eventually cease to all intents and purposes. The probability that small parcels of western concentrates will still find their way into CIS smelters is not discounted, but the quantities are believed to be insignificant.