LONDON (Commodity Online): Copper firms are drawing up major expansion plans to cash in on the anticipated boom in copper demand in the coming years.
With China actively involved in stocking up copper, major copper producers across the globe are expecting a huge demand in the coming years. Moreover, copper firms made good profits this year cashing in on the India-China boom.
Copper firms’ intensions in the coming months were made obvious this week when Xstrata, the world’s biggest exporter of coal used in energy plants, said it had approved $4.2bn to build the Las Bambas copper mine in Peru and $1.1bn for the Ulan West coal project in Australia.
The companies’ 15 major growth projects were now in the construction phase representing a total of $14bn of capital investment. These projects alone will deliver substantially all of the frim’s expected 50pc increase in overall volumes by 2014.
Pre-tax profits for the six months to June 30 increased to $3.2bn from $1.1bn in the same period last year, boosted by a bounce in metals prices. Average copper prices increased 75pc in the second quarter and zinc prices 63pc compared with a year ago.
Sales at Xstrata also climbed sharply to $13.6bn in the first half – an increase of 43pc year-on-year – as demand recovered.
These two latest investments mean Xstrata now has 15 major projects underway and will put the company on track to deliver its target of a 50% increase in volumes and a 20% decrease in costs by 2014.
The short-term macro-economic outlook is mixed, with uncertainty likely to remain in Europe, while the developing economies of China, India and Brazil provide the main driver for demand growth.
