UPDATE 3-Chile copper output seen up 5.5 pct in 2008-SONAMI
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SANTIAGO, April 7 (Reuters) - Chile's copper output will rise 5.5 percent in 2008 to about 5.9 million tonnes of the red metal, copper industry association SONAMI forecast on Monday, saying current high prices were hostage to the fate of the U.S. economy.
SONAMI projected that copper prices, currently near record levels of $4 per lb, would level out through 2012 to between $2 and $2.50 a lb.
SONAMI expects copper to average $3.30 a pound during 2008 after averaging $3.52 a pound during the first quarter of this year.
"SONAMI forecasts a copper output increase of 5.5 percent this year, which would enable us to reach around 5.9 million tonnes this year, an increase of 300,000 tonnes," SONAMI President Alfredo Ovalle told a news conference at the start of the CRU/CESCO copper week conferences in the capital Santiago.
"This growth is due mainly to increased output of Collahuasi, Gabriela Mistral, Escondida's sulphide leach plant, (BHP Billiton's) Spence and Los Pelambres among others," he added.
SONAMI forecasts that copper output in Chile, the world's largest copper miner, would also climb in 2009 to 6.0 million to 6.1 million tonnes of the metal.
Chile, which provides around a third of the world's copper, produced 5.588 million tonnes of copper in 2007, a rise of 3.8 percent over the previous year.
Ovalle said prices of molybdenum, Chile's No. 2 export after copper, averaged $33.3 a pound in the first quarter, up 28 percent from the same period in 2007.
Chile is a top producer of molybdenum, which is used in high-strength steel alloys, with output hitting 44,750 tonnes in 2007, up 3.9 percent from a year earlier.
U.S. SLOWDOWN, CHINA
Ovalle cautioned that his copper price forecasts would depend largely on the extent of a U.S. economic slowdown, and to what degree it affects the rest of the global economy and in particular major copper consumer China.
Ovalle said he was worried about further possible strikes threatened by subcontract workers who want state-owned Codelco to improve benefits in line with the miner's unionized employees.
They also want Codelco to take on 5,000 subcontractors as full-time workers. Strikes last year hit output at the world's largest copper producer.
Energy shortages in Chile due to the impact of a severe drought on hydroelectric reservoir levels and reduced natural gas supplies from neighboring Argentina were also a concern. Continued...
