In the middle of September, CREDIT SUISSE issued a report that examined the global copper supply from 2007 through 2015. Too much or too little? asked the author. With 66 new projects planned, will the supply outstrip demand and force the price downward?
Well, Credit Suisse summarized, the copper supply will grow only 2.3% in 2008. Therefore, prices will remain strong, perhaps spiking above US$3.00/lb. If all 66 projects currently on the drawing board went ahead as proposed, copper supply would outstrip demand by 2015. In that case, the long-term price would fall as low as US$1.35/lb. However, Credit Suisse expects many of the proposed producers will suffer delays due to the shortages of labour and equipment.
The plans for new production are ambitious. Each project carries a roughly US$1-billion price tag, putting the cost of creating 66 new projects at approximately US$66 billion.
Among them, XSTRATA, CODELCO and ANGLO AMERICAN have 18 projects on their drawing boards. Approximately half the projects are in Latin America; and 10 of the 14 projects located in Africa are in the Democratic Republic of the Congo. In Canada, the Credit Suisse report lists only two projects - AUR RESOURCES Duck Pond in Newfoundland and the NOVAGOLD/TECK COMINCO undertaking at Galore Creek in British Columbia.
Other Canadian copper projects were overlooked. There is the Minto mine of SHERWOOD COPPER that will mark its official opening in the Yukon next week. There is also BCMETALS Red Chris project, REDCORPs Tulsequah Chief project, and FNX MININGs Podolsky mine and Footwall property. In some cases copper may be a co-product, but it will add to the global supply.
The Credit Suisse assessment is probably one of the most accurate that is available today. The organization certainly has the resources and researchers to gather all the relevant facts. Followers of the copper industry might want to contact the lead author, Jeremy Gray, at jeremy.gray@credit-suisse.com.
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