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Esperanza, a Copper Mine owned by Antofagasta PLC, and Marubeni Corporation, is located in Chile. Esperanza primarily produces Copper and is also active in Gold, Molybdenum and Silver. Copper Mine Production Cost Reports & DatabasesThis year and beyond will be notable for a decline in total cash costs before by-product credits. Unlike recent years, nickel producers have discovered that the shortages of skilled and specialist labour, materials, trucks, machinery and equipment is rapidly abating, leading to lower costs. Oil is no longer at the record highs and consequently the lower cost of oil-related products, such as diesel, have assisted operations. 2008 will be remembered as the culmination and rapid reversal of years of unprecedented demand growth for commodities from the developing economies. This overwhelmed the supply of skilled labour, materials and equipment, resulting in dramatic price increases for mining, milling and offsite costs. Margins for copper producers widened to historically unmatched levels. The revenue received from by-product credits is critical to net cash costs and profitability. A number of mines (some in Canada and Russia for example) have negative cash costs. Naturally the proportion of production recording negative costs will decline, and the proportion of production with costs exceeding US$1.00/lb will increase dramatically as the relative importance of by-product credits decline. Almost all copper mines produce meaningful quantities of at least one other base metal. Therefore, in most cases, the sale of by-products has a material impact on the overall cost of producing a pound of copper. This means that polymetallic mines in particular can have very wide variations in total cash costs. Modest declines in by-product revenue assumptions can move a mine with moderate costs to the upper end of the cost curve very quickly. Currency fluctuations have affected the cost structure of the copper industry. The global economic crisis has seen currencies of the commodity-based economies of Australia, Canada, South Africa and the South American producers depreciate by between 30% and 50%, which has decreased costs on a USD basis. Conversely, it has resulted in the United States becoming less competitive internationally. Our Copper Mine Production Cost Report covers operational data over a 10-year time span, representing more than 84% of output. The multi volume analysis estimates production costs in 26 countries, including many of the major facilities around the world. Cost estimates, covering the production process from concentrate or finished metal are provided. Copper Mine Cash Cost Breakdown Copper Smelter & Refinery Production Cost Reports & DatabasesThe period 2004 to 2008 has seen gathering inflationary pressures on most costs, varying with location. The average apparent cost difference is 10.6% in real terms (2008 US$). The cost increases are masked by windfall by-product credits that have been realised for sulphuric acid during late 2007 and early 2008, and continuing higher revenues for precious metals. Whether smelters are able to take advantage of acid credits is debatable being dependent on availability of transport to global markets, location and prevailing offtake arrangements. Our position is to assume that smelters will increasingly gain leverage from market prices, as minimum tonnage supplies and contracts are reviewed in their favour. Looking behind these costs at the before-credit costs the underlying trends can be seen reflected in real terms increases of around 17% in low inflationary economies such as Japan and over 40% for the period in developing economies such as Chile. The previous influences of increasing unit capacities and productivity are still evident, although the effects are counteracted by surging wage inflation, energy, transport and consumables costs. The major by-products of copper smelters are precious metals and sulphuric acid. Smelters selling blister or anode copper to a refinery may receive payment for any contained precious metals. Refineries sell precious metals as anode slimes (a wet powder) or refined metal. Sulphuric acid, generated from sulphur dioxide off-gas, is either an asset or a problem often depending on the location of the smelter. The cost of transporting acid may outweigh the price received for it, while in some mining economies acid can be used for leaching. If the spot market for acid (used in chemicals and fertilisers) is very buoyant, smelter operators can add elemental sulphur to the feed blend so as to generate additional revenue. Smelter upgrades aimed at increasing labour productivity and reducing fuel and energy consumption have been made in Chile, China, Australia, South Korea, India and Indonesia. This is driven by tightening environmental legislation and cost reduction. Our Copper Smelter and Refinery Cost Report covers operational data over a 10-year time span, representing more than 86% of world output. The multi volume analysis estimates production costs in 26 countries, including many of the major facilities around the world. Cost estimates, covering the production process from raw materials consumption to either concentrate or finished metal are provided. Copper Smelter & Refinery Cash Cost Breakdown We benchmark all major operations to highlight changes, assess profitability and identify opportunities. This research provides:
The database ensures access to accurate and timely information for most of the world’s operations. Our analysts conduct thorough examinations of well-sourced data to provide valuable answers, saving you time and effort. Specifically, our work is based on detailed analysis of flow sheets, exhaustive company research, and ongoing revisions supplemented by mine visits and technical contact with individual operations.
Copper Strategic Market ReportsMarket fundamentals will be determined by the speed and size of the recovery from the global recession. At this stage, 2009 will be a tough year for global consumer demand, and deflationary conditions will remain until 2010. Planned fiscal stimulus plans in China, USA and a host of lesser economies will assist with demand and consumer confidence, and this is likely to effect an improvement on commodity demand in 2010. Longer term the economy will revive, driven by the planned Keynesian government expenditure, continued urbanisation in Asia and progressive industrialisation in the wider developing world. However, global growth will be at more modest levels in comparison to the last ten years. Thus spectacular growth was driven by four principal factors, a combination unlikely to be replicated any time too soon:
Global GDP growth rates will recover after the recession is over, but will be somewhat more modest at around 2% per annum below the rates experienced in the last five years. Deep cuts are being made to supply by many major copper producers. Rapidly rising stock levels send price-depressive signals to the copper market, and conversely the success of producers in cutting supply will be evidenced in lower inventories and higher prices. Global Demand for Copper by Region Copper prices were resilient last year and thus far in 2009, compared to other base metals. Future prices in the short term will be set by the progress of the race between declining demand and current producer efforts to cut production. Prices will receive support as many future expansions and projects are being deferred, delayed or simply cancelled with no reasonable likelihood of proceeding until firm evidence of demand growth restoration. This is exacerbated by the absence of lending on any real scale, and the collapse of equity markets funding. In the longer term, demand restoration will occur from a combination of the global fiscal stimulus packages, continued urbanization and infrastructure building in the developing world, and a recovery in consumer confidence in the Western world. When this occurs, it is likely that supply may once again lag demand growth and lead to a surge in the price of copper. With over three decades of experience in market analysis, AME appreciates the old adage "the devil is in the detail" is a fundamental truth. To this end, we concentrate our investigation on end-users, particularly the construction, transport, equipment and consumer durable sectors. We provide, usually quarterly, strategic supply/demand and price analysis to generate our long-term view. We offer:
Copper Price Copper OutlooksOur monthly Outlook offers short-term analysis on developments, operations, consumption, production and trade and export in the Copper Industry. A tactical, topical and thought-provoking tool; the service includes:
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