IM’s May issue will examine many of the projects around the world, new mines and mine expansions. It will also look at new technologies.

The copper market needs significant new production to compensate for declining ore production and the growth of consumption worldwide. Phelps Dodge (PD) analysts believe that copper demand could see an additional 3-4.5% growth rate between 2005 and 2010, requiring 2 Mt of new production by 2010 at the 3% rate and 3.5 Mt at the 4.5% rate.

There was a large inventory of huge copper projects in the 1990s, but not today. To compensate for this we will likely see many more smaller projects developed and technology developments to extend the lives of existing operations, such as underground mining of deeper, high-grade orebodies. We will also see increasingly adventurous developments in countries like the DRC. PD, for instance, is changing its greenfield exploration targets to "higher political risk jurisdictions where there are still outcropping ore bodies to be found," according to Exploration President Richard Leveille. "Exploration maturity is a huge issue for us on a world scale as an industry." Positive political trends and favourable geology are important to Leveille. He also indicated PD interest in large parts of Asia.

Copper prices trended upward throughout 2005, and the COMEX spot price reached a record-high monthly average of $1.90/lb in October. This year it has been volatile but the price has seen very attractive levels for copper miners, averaging about $2.15/lb in January and over $2.20/lb in February and March. Last quarter, PricewaterhouseCoopers surveyed 10 analysts whose average predictions were $2.08/lb for the second quarter; $1.94/lb for the period up to first quarter 2007 and suggested using $1.06/lb for “purposes of longer-term valuation and investment analysis.”

According to preliminary ICSG data, the refined copper market for the full year 2005 was essentially balanced. This compares with a production deficit of 887,000 t for 2004. For the full year 2005, global usage fell by 1.53% compared with that of 2004. On a country by country basis, China, India and the Russian Federation saw year–on-year growths of 9%, 13%, and 9%, respectively, while the EU, Japan, South Korea and the USA fell by 9.5%, 4.5%, 9.5%, and 6%, respectively.

World mine production increased by 2.8% in 2005 compared with that in 2004: Concentrate production was up by 3.6%, and SX-EW was down by 0.6%. Mine capacity utilization averaged 90% in 2005, below the 92% rate seen in 2004. Although there was a 15% increase in Chilean mine production in December, total 2005 mine production in Chile was down by 1.7% owing to production problems during the first part of the year. On a regional basis, the main contributors to the annual mine production growth were Africa (DRC and Zambia), where production grew by 7.3%; Asia (China, Indonesia and Laos), 11.7%; and Oceania (Australia and Papua New Guinea), 10%. Combined production in North and South America remained essentially unchanged as production increases in Argentina, Brazil and Canada were balanced by lower production in Chile and the USA (-1.4%). European mine production was also unchanged.

Total world refined production increased by 4% in 2005 compared to production in 2004: Primary production was up by 3.9 % and secondary production (from scrap) was up by 4.4%. The main contributors to this increase were China, India and Indonesia, which achieved year-on-year growths of 19%, 20% and 25%, respectively. On a regional basis, refined production was flat in Africa and the Americas, decreased by 3.9% in Oceania, and increased in Asia and Europe by 11.7% and 1.5%, respectively. Refinery capacity utilization averaged 81.3% in 2005.

In a slight contrast to ICSG’s report of a balanced market, global inventories for 2005 declined by about 40,000 t: Exchange inventories rose by 32,000 t and estimated non-exchange inventories declined by about 72,000 t. The ICSG says the “relatively small discrepancy could easily be accounted for by releases of unreported stocks excluded from ICSG data and from small variances to ICSG estimates for certain countries. As of end of February 2006, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 199,026 t, an increase of 41,112 t from stocks at the end of January and 42,755 t from those held at the end of December 2005. Stocks were up at all Exchanges warehouses.”

The USGS estimates known reserves of 140 Mt in Chile, 35 Mt each in the USA and Indonesia, 30 Mt each in Peru and Poland, 27 Mt in Mexico, 26 Mt in China, 24 Mt in Australia, 19 Mt in Zambia, 14 Mt in Kazkhstan, 7 Mt in Canada and 60 Mt in other countries.

The Fraser Institute’s ninth annual Survey of Mining Companies was released in March and ranked Chile the most attractive jurisdiction in which to mine or explore for minerals. A would-be copper producer (Ivanhoe’s Oyu Tolgoi), Mongolia, came third. The respondents to the survey (322 of the 1,435 companies approached) reported spending $1.83 billion in 2005 compared to $1.31 billion in 2004. Of those, 32 companies explore for copper.