* Jiangxi sees avg 2012 copper price $8,500/t
* Says not worried about slower China growth
* Says aims to expand through offtake deals, acquisitions
By Silvia Antonioli
SANTIAGO, April 17 Jiangxi Copper Co Ltd
, China's top copper producer, said high
inventories in China are a temporary issue and will gradually
come down, although end users remain cautious and some expect
lower prices and are keeping inventories low.
Chairman Li Yihuang said he was not worried about slower
economic growth in China and forecast copper prices will average
$8,500 a tonne in 2012 before moving higher in the next few
years. London Metal Exchange (LME) three-month copper
was is currently trading around $8,000 a tonne.
"I realize that a lot of people are concerned about a Chinese
hard landing and high inventories of copper but personally I am
optimistic and expect 6-7 percent growth in copper demand for
the next five years," Li told Reuters in an interview on Tuesday
during CESCO week copper conference.
Top buyer China consumes about 40 percent of the global
His comments come after stocks in Shanghai Futures Exchange
warehouses have doubled so far this year, raising concerns about
the strength of Chinese demand.
Demand from copper cable manufacturing is still very healthy
and copper demand from the car manufacturing industry is in very
good shape, Li added.
Consumption of copper tubes which go into white goods, such
as fridges, however is suffering as inventories for those
products in China are high, he added.
Spot treatment and refining charges (TC/RC), which are paid
by miners to smelters to turn their concentrate into refined
metal, are currently very low and will likely remain so until
the last quarter this year.
"Starting from fourth quarter it will get better, TC/RC will
be higher. Mining production from 2013 onwards will increase
dramatically, more than refinery capacity. This will mitigate
the current weakness of TC/RCs, which is good news for
smelters," he said.
These charges have been under pressure in recent months due
to a shortage of concentrate. Traders reported TC/RCs as low as
$27 per tonne/2.7 cents per lb in March, down from around $35
per tonne earlier in the month.
Jiangxi is now looking to expand in copper mining via
acquisitions, partnerships or offtake agreements and it is
aiming to reach 40 percent self-sufficiency in copper
concentrates supply within the next five years.
"This is the first time that I have come to CESCO and the
reason I am here is to talk with the mining industry's top
executives to seek possibilities of collaboration, investment,
offtakes, these kinds of relationships. I feel very positive
about Chile because it is such a resources-rich country," Li
Jiangxi is also planning to expand production of rare earths
and other metals such as zinc, lead and gold, he said.
The company said it is currently exporting about 8 percent
of its copper cathodes after not selling any material abroad
The export increase is not a result of lower domestic demand
but rather an attempt to cash in on higher prices abroad, Li
He said premiums for Jiangxi copper paid for delivery over
the Shanghai Futures Exchange benchmark base price were
currently at about 80 renmimbi ($12 per tonne), against a 200
renmimbi discount to the benchmark late last year.