The copper price has more than doubled in two years and is showing no signs of weakening.
The copper price has more than doubled in two years and is showing no signs of weakening.
And with continuing strong Chinese and Indian demand, ongoing strikes at large copper mines in Canada and the US, smelter and mine closures in Zambia, and a dearth of new projects in the pipeline, the price is expected to stay over the $US4,000 a tonne ($A5,470) mark.
Chinese copper imports lifted 12 per cent in the first eight months of this year as major users, including telecommunications manufacturers and construction companies, rushed to hedge against further price hikes.
China uses up to 20 per cent of the world’s copper supply, with demand fuelled by a housing and constructions boom, and a national need for electricity supplied via copper-based power lines.
The head of Canada’s Falconbridge, Derek Pannell, said recently the current demand, shortage of supply and lack of new projects would push prices higher over the next 10 years. Falconbridge is one of the world’s biggest nickel and copper miners.
Large declines in both mineral exploration expenditure and the time it takes to bring on new mines meant producers would struggle to meet demand for nickel and copper, he said.
Global exploration spending halved between 1998 and 2001, and new projects now take between four and 10 years to start.
Mr Pannell also raised the possibility of a fresh burst of consolidation in the sector, with industry giants such as BHP Billiton, Rio Tinto and Companhia Vale do Rio Doce looking for acquisitions.
His views on exploration and the expected continuing strength of the resources sector are shared by Martin Place Securities’ Barry Dawes, who expects the gold price to sit well over $US500 an ounce next year. It is currently trading around $US490/ounce.
Mr Dawes said commodity prices were still low and forecast higher prices to come, pushed up by China’s burgeoning steel industry and its thirst for commodities that should ensure the resources boom would continue for another five or six years.
He said that while exploration levels were picking up again, they were still well down on what was required to find big orebodies.
