Chinalco Mining bullish despite copper price fall
Resources giant's optimism about metal's prospects runs counter to analysts' forecasts of a supply surplus on global market this year
Chinalco Mining, the non-ferrous and non-aluminium metals unit of aluminium giant Chinalco, remains upbeat on copper prices despite recent falls and less rosy views among analysts.
"We are optimistic on the [demand and supply] fundamentals of copper, we believe copper is relatively robust among other metals," chief executive Peng Huaisheng said.
With projected cash production cost of about US$1,509 per tonne, Peng said Chinalco Mining had a "relatively strong" capacity to withstand price declines.
The company has completed about 80 per cent of construction work at its US$3.5 billion Toromocho mine in Peru, about 140 kilometres from the capital, Lima. Commercial production is scheduled to start in the fourth quarter of this year, and the company estimated its net profit would exceed US$300 million next year.
It is the world's third-largest pre-production copper project, measured by average planned annual production between last year and 2020, according to metals researcher CRU Strategies.
Some analysts and Australian metals giant Rio Tinto have projected that copper supply will turn into surplus this year and next year after years of shortages, putting downward pressure on its price.
The three-month copper futures contract has fallen 6.1 per cent since the end of last year and fetched about US$7,450 a tonne yesterday, with much of the decline caused by speculators.
