TORONTO (miningweekly.com) – Strong copper demand from China and other emerging countries, together with steady improvements in North America and Europe, have resulted in a “very tight” global copper market, Freeport-McMoRan Copper & Gold CEO Richard Adkerson said on Thursday.
“Fundamentally, we feel very good about the marketplace in 2011, and we are very positive over a longer period,” he told analysts and investors on a conference call.
The copper price fell to its lowest in around a month on Thursday, after better-than-expected economic growth numbers out of China.
“The market's concerned that that's going to lead to steps to control that growth,” Adkerson commented.
“China's had a great run in being able to have very significant growth and to manage that growth in a way that it doesn't create the kinds of ups and downs that you see in a lot of other economic situations.”
While copper demand for residential and commercial real estate in the US remains weak, other sectors like manufacturing are showing increased strength, he said.
“So we add to the fact of the continuing strength in China and the emerging markets, sectors in the US and North America of improvement, and that's added up to a copper market that's very tight globally and a positive outlook for the marketplace,” Adkerson said.
Freeport has mines in North and South America, Indonesia and Africa.
'TURN THE SPIGOT ON'
In the longer term, copper prices will be driven by the limits on bringing new supply into the market.
“We would like to turn the spigot on and produce more copper today, but we can't do that because of the time it takes to drill resources, to get permits, to get water and power and so forth,” he said.
“And that's a double-edged sword - we can't turn it on quickly but others can't either and that leads to the strong prices.”
Freeport expects to sell 3,85-billion pounds of copper, 1,4-million ounces of gold and 70-million pounds of molybdenum in 2011.
Copper and gold shipments will decline compared with 2010, as the company mines lower grade ore at its big Grasberg operation in Indonesia, while molybdenum sales will increase year-on-year.
Copper futures for March delivery fell more than two percent in New York on Thursday, to $4.272/lb.
Freeport shares were down 3,8%, at $110,75 apiece, by 15:26 in New York. The stock traded as low as $109,15 earlier in the day.