UPDATE 2-Nippon Mining may cut copper output on weak demand
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TOKYO, Dec 3 (Reuters) - Nippon Mining Holdings Inc (5016.T), Japan's top copper producer, said it is thinking of curbing copper output by 10-20 percent due to weak demand, which it said would be its first deliberate cut in at least 10 years.
Nippon Mining has yet to decide on details such as when the output cut will begin and aims to reach a decision this year, a spokesman said.
Sumitomo Metal Mining Co Ltd (5713.T), Japan's second-largest copper smelter, could not immediately comment on any possible changes to its production plans.
An industry official said Japanese smelters had last cut production in 2001, when the September 11 attacks in the United States led to an economic downtrend.
Demand for copper, which has a variety of applications from utensils to construction, has cooled sharply since the financial crisis in the United States deepened, industry officials say.
An output cut by Nippon Mining, which has an annual copper production capacity of about 610,000 tonnes, would follow curbs by its Chinese counterparts.
Tongling Nonferrous Metals (000630.SZ), China's second-largest copper producer, has reduced copper output due to low prices, company sources said in October. [ID:nHKG54095]
Copper on the London Metal Exchange officially closed at $3,555 per tonne on Tuesday. It fell to $3,375 in late November, its lowest since July 2005. [MET/L]
The industry official said falling demand from China had probably contributed to Nippon Mining's decision.
"It has been exporting to China what it cannot sell on the domestic market, and its outlook on China next year is likely to be very poor," he said.
Nippon Mining said a production curb would mean it would buy less copper concentrate, the raw material to produce the metal, next year.
Japanese smelters have been forced to procure the raw material from global miners on unfavourable terms, and this may also have been a factor in the decision, the official said.
Negotiations for copper concentrate to be purchased in 2009 are currently taking place.
Pan Pacific Copper Co Ltd, the copper refining and development arm of Nippon Mining, had initially planned to produce 310,600 tonnes of copper in the October-March second half of the business year, up about 2.6 percent from the same period a year earlier.
It would be up from estimated production of 299,900 tonnes in the April-September first half.
In September, the Japan Copper and Brass Association cut its estimate for Japanese copper demand to 977,000 tonnes for the year to March, a decline of 2.1 percent from the previous year. (Editing by Michael Watson)
