* China taking 30 pct of Codelco cathode sales, vs 32 pct
* Sees high energy costs, 'big challenge' managing 2-3 huge
* China copper demand rising but country dipping into own
By Maytaal Angel
MADRID, March 6 Codelco, the world's
top copper producer, said it is slowly scaling back its exposure
to top consumer China as Beijing becomes more self-sufficient in
meeting its copper needs through local production.
Codelco currently sells about 30 percent of its refined
copper cathode to China, versus about 32 percent this time last
year, Rodrigo Toro, Codelco's corporate sales vice president,
told Reuters at the Metal Bulletin copper conference in Madrid.
"We decrease marginally our sales to China in order to
allocate more in Europe and the U.S. China's objective is to
maximise their refined copper production, and with more
concentrates available its possible they will produce more
themselves," said Toro.
The Chile-based copper company has launched an ambitious,
long-term investment plan of roughly $28 billion to boost output
at its aging mines, and is aiming to produce more than 2 million
tonnes of the red metal by 2021.
To do so, however, the company, like its other mining
counterparts in Chile, is battling mining accidents, labour
unrest, rising costs, dwindling ore grades, energy woes and
"To manage huge projects and at least 2-3 of them in
parallel is a big challenge. Probably energy will be more
expensive but the key point is to have the project at the end of
the day," said Toro.
"If we put forward an investment plan like this it is
because we have a very strong view of the copper market. we
believe demand will keep growing at healthy rates and be good
enough to have strong prices."
Toro expects average 2013 copper prices to be fairly
similar to last year's levels of $7,958.33 a tonne, adding that
Codelco is still on track to produce 1.7 million tonnes of
cathode this year.
Copper prices are currently trading at around $7,700 a
tonne, having fallen over 2 percent this year on rising supply,
fiscal problems in the U.S., political and sovereign debt
concerns in Europe, and weak demand from China.
"I don't see weaker demand in China. Copper prices have
fallen because the Chinese bought too much last year, they have
a large stock in bonded warehouses and today they consuming what
they have in stock, but copper consumption in China is rising,"
At the same time, however, production from mines is rising
globally, with the copper market this year having moved into
surplus from years of recorded deficits. Aside from weighing on
prices, this also adds to costs for miners as it means smelters
can charge them higher ore processing fees.
The fees are called treatment and refining charges (TC/RCs).
A ten percent increase in benchmark 2013 TC/RCs to $70 a tonne
and 7 cents a pound was agreed in Europe in January, while
similar levels were agreed in Asia.
"I expect to see more concentrate supply for the next two
years, but no one can say after that because it could change if
more smelters are built, which I believe is one of the
objectives of companies in China," said Toro.