The copper industry and SX-EW output

Copper is in a bull market, but supplies of the red metal appear set to rise significantly during the next few years.

Higher production, both for new projects and expansions at existing operations, should be sufficient to close the current supply deficit by 1996, with the probability of a surplus emerging in that year.

This outlook takes into account those projects and planned expansions to which companies have already made commitments, says research firm Brook Hunt & Associates in a new study titled “The impact of SX-EW production on the copper industry.” There are, however, a large number of other projects (many of which are based on low-cost solvent extraction-electrowinning cents SX-EW] technology), for which development programs could be accelerated, given favorable prices.

Today’s high prices provide just such an environment, the study states, and there is a risk that the number of new projects in the next two to three years may be so high that the copper market will face serious surpluses. From a forecast deficit of nearly 400,000 tonnes this year, a more-or-less balanced market is expected in 1995, but there is the potential for a surplus exceeding 300,000 tonnes in 1996 (assuming consumption growth in excess of 3% in both 1995 and 1996).

Typical cash costs for SX-EW copper are below US50 cents per lb., which compares with average cash costs for conventional production in excess of US60 cents.

The study says SX-EW output is expected to grow from 950,000 tonnes in 1994 to more than 1.5 million tonnes in 1996 and to 2.2 million tonnes by 2000 (which will exceed, in tonnage terms, anticipated net increases in production from conventional producers). These forecasts do not include additional projects under consideration which, if developed, could raise that total to 2.7 million tonnes per year by 2000.

In the shorter term, the increase in SX-EW production is expected to require unprecedented reductions in mine-smelter-refinery capacity utilization rates. Otherwise, closures may be unavoidable.

For more information, contact Brook Hunt & Associates, Woburn House, 45 High Street, Addlestone, Surrey KT15 1TU, U.K.