Copper
Copper price remains at three-year high
December 2017
The month-average copper price rose 0.3% in October to US$6,827/t (US$3.10/lb). This small rise made November the sixth consecutive month in which the monthly average increased. Exchange refined copper inventories of 547kt at the end of November were down 3.9% from 569kt at the end of October. LME stocks in Asian warehouses declined by 81kt to 87kt during the month, but the drop was largely offset by a 61kt increase in SHFE stocks to 169kt.

Production has resumed at KGHM’s 450ktpa Głogów I smelter in Poland and at Rio Tinto’s Garfield 335ktpa smelter and refinery in the US after short term disruptions. An accident in the recovery boiler at Głogów in early October resulted in an 18kt loss in copper output while repairs were completed. Rio Tinto restarted Garfield on the 17th of November after a suspension of almost six weeks due to a workplace related fatality.

After being a focus of the copper market in early 2017, mine strikes were again in the news in November. On the 22nd, Southern Copper workers in Peru started a strike demanding a fair share of profits. At the end of the month, the strike was continuing. Southern Copper operates the 180ktpa Cuajone and 150ktpa Toquepala mines and the Ilo 360ktpa smelter and 280ktpa refinery. The strike’s impact on operations is currently unclear. On the 23rd of November, unionised workers at BHP’s 1.2Mtpa Escondida mine in Chile went on strike for 24 hours to protest against a decision to lay off approximately 120 workers. At the end of November, one of the unions representing workers at Teck’s 76.5% owned Quebrada Blanca mine rejected a contract offer which increases the likelihood of a strike. Quebrada Blanca is a relatively small producer. It is expected to produce 23kt of copper cathode in 2017.

The project pipeline appears to be starting to flow more freely. In August, BHP approved a US$2.4bn investment to extend Spence in Chile and OZ Minerals announced a go ahead for Carrapateena in Australia. Ivanhoe Mines revealed results of a preliminary economic assessment (PEA) for Kakula-Kamoa in the DRC in November. The PEA evaluated a 6Mtpa mine at Kakula producing 284ktpa of copper in concentrate in the first ten years. Twin declines are underway at Kakula and a pre-feasibility study is in progress. The PEA includes an option for a two-stage development, with initial production from a 6Mtpa Kakula mine, increasing to 12Mtpa with ore from the Kansoko mine, and construction of a smelter. Anglo American has previously stated the feasibility study for the 220ktpa Quellaveco project in Peru will be completed by the end of 2017 and construction may start in 2018.