Mining Copper in Africa
In February 2013, KPMG in Chile published the Quarterly Commodity Insights Bulletin, focusing on Copper. With overall copper demand expected to increase 3.6% in 2013 and 4.3% in 2014, the following are some of the insights gleaned from the Bulletin…
World copper mine production increased 2% year-on-year to 16.60Mt in 2012. Production from Chile, the world’s largest copper producer, increased 4% year-on-year to 5.48Mt, after a lower mine production in 2011 due to a series of labour disputes, extreme weather, and declining ore grades.
World refined copper production increased 3% year-on-year to 20.26Mt in 2012. China’s refined copper production increased 9% year-on-year to 5.66Mt in 2012 due to continued expansion in refining capacity.
Japan’s production of refined copper is also expected to have grown due to its domestic industry recovering from the effects of the 2011 tsunami. However, copper production from Zambia is expected to have decreased 6% year-on-year to 0.82Mt in 2012.
Global production of mined copper
A substantially higher production was observed at existing Chilean copper mines such as BHP Billiton’s Escondida and Anglo American’s Los Bronces mine in 2012. Vale SA’s Salobo mine in Brazil (0.10Mt annual production) and Xstrata’s Antapaccay Mine (0.14Mt annual production) in Peru also commenced production in 2012. In addition, commissioning activities started at Boseto Copper mine, which would be the largest copper mine in Botswana and is expected to produce 0.36Mt of copper annually.
Global mine production in 2013 is expected to increase 6% year-on-year to 17.61Mt. Mine production from Chile is expected to increase 1% year-on-year to 5.53Mt in 2013 and then 4% year-on-year to 5.75Mt in 2014.
Asian mine production is expected to increase due to the commissioning of Turquoise Hill’s Oyo Tolgoi mine in Mongolia and the mining of higher ore grades at Freeport McMoran’s Grasberg mine in Indonesia. Zambian mine production is expected to increase due to production ramp-up activities at Vedanta’s Konkola and Nchanga mines.
In 2013, increased availability of copper concentrates is expected to support higher global production of refined copper. Production is expected to increase 6% year-on-year to 21.38Mt.
Global production of refined copper
Global consumption of copper increased 2% year-on-year to 20.38Mt in 2012, led by China where the refined copper consumption increased 8% year-on-year to 8.53Mt in 2012. Copper consumption in North America increased 6% year-on-year to 2.01Mt.
Together these two economies contributed towards higher world copper consumption in 2012. By contrast, refined copper consumption in Europe declined 9% year-on-year to 3.64Mt in 2012 due to the existing economic conditions in the region.
Global consumption of copper is expected to grow 3% year-on-year to 20.93Mt in 2013. Chinese refined copper demand in 2013 is expected to increase 5% year-on-year to 8.96Mt driven by expected acceleration in infrastructure project development and the current ongoing monetary easing in the country.
This is expected to support the real copper demand in China during 2013. Refined copper consumption in North America is expected to increase 1% year-on-year to 2.04Mt.
Global consumption of refined copper
The US housing sector is expected to drive the copper demand in the country. The sector has shown strong signs of recovery in the previous quarters, with building permits and housing prices increasing through 2012.
Given the current rates of construction and depressed household formation rates in recent years, the demand from copper is expected to grow in the US in 2013 and 2014. Many important emerging copper consuming markets such as Brazil, Korea and Taiwan saw weakened demand in 2012.
However, most of these economies are expected to show signs of sequential improvement in 2013. Such economies tend to be quite sensitive to conditions in the US, Europe, and China.
Thus, with expected improvement in demand from the US and China, a significant demand improvement from these countries may be expected in 2013.
During 4Q12, the total value of announced deals in the copper industry was US$7.4 billion, compared to US$2.9 billion in 3Q12, representing a quarter-on-quarter increase of about three times. The number of deals in 4Q12 increased to 12, compared to three in 3Q12.
About David Okwara
Angola, BHP Billiton, Brazil, Chile, China, copper, copper consumption, copper production, demand, development, economic conditions, economies, emerging copper consuming markets, expansion, extreme weather, global, improvement, infrastructure, Korea, labour, labour disputes, mine production, North America, Peru, production, recovery, refining capacity, Taiwan, Zambia, Zambian mine