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Monday, October 08, 2007

Copper to $9,000 - Lundin Mining LUN.to LMC upside underestimated

When Lundin Mining took over Tenke Mining estimated long term price for copper in Tenke Fungurume Project was ... USD 1.0. There is a lot political risk, but I do not think that we will see copper at 1.0 USD for 1 lb again.
"Copper specialists Bloomsbury Mineral Economics believe that we can expect copper prices to reach $9,000 a tonne within the next two years.
Author: Lawrence WilliamsPosted: Friday , 05 Oct 2007
LONDON -
In a presentation at Mining Journal's 20:20 Copper Day in London, Chris Welch of copper specialist analytical service, Bloomsbury Mineral Economics (BME), made a strong case for copper reaching $9,000 a tonne - $4.08 a pound - by 2009. Given that BME has a great track record on copper price predictions such a prediction should not be taken lightly!
The point perhaps that both speakers were making is that individual corporate presentations of copper mine supply are frequently heavily overestimated but many analysts may take these as reality without applying a big enough discount for projects which are cancelled, fall behind schedule or for major supply disruptions for technical, political and labour reasons. Real growth in copper consumption remains very strong, older mines are becoming depleted and grades are declining sharply.
Another interesting point which arose in Longley's presentation was the rate of copper usage per capita in the Asian sector in particular. It was pointed out that growth in Taiwan and South Korea has been very high in relation to the developed nations where the curve was lower because of the existing copper based infrastructure. But in the real growth economies like China and India, this growth pattern has hardly started yet, and should this rise to Korean or Taiwanese levels then the effect on the$ supply/demand pattern could enormous with price development which could make $9,000 copper itself a huge underestimate!"

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