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Barrick Gold expects strong copper use, healthy prices
March 26, 2012 / 11:45 PM / in 6 years

Barrick Gold expects strong copper use, healthy prices

Members of Canadian company Barrick Gold work on the water dam affected by rains in Cotui May 30, 2011. REUTERS/Eduardo Munoz

(Reuters) - - Barrick Gold (ABX.TO) expects copper prices to remain “healthy,” as the mining industry works to meet demand for the industrial metal.

“We think the structural factors in place with demand from China and India and other emerging markets will continue to be a very strong factor for years to come,” Aaron Regent, president and chief executive officer of Toronto-based Barrick Gold told the Reuters Mining Summit on Monday.

Barrick is the world’s largest gold miner, but also operates two copper mines, with a third one due to open this year.

With barriers to maintaining and growing copper supply “very high and intensifying,” Regent added, the price of copper should remain strong in order to support those efforts.

“Our outlook is driven by the challenge the industry is under to mount the supply response to meet demand. As a result, the (copper) price is going to have to be pretty healthy,” he said.

The benchmark May copper contract on New York’s COMEX Exchange closed Monday at $3.8875 a lb., up 2 percent.

“At $3.80 to $3.90 a lb., the industry generally has pretty good margins, pretty good profitability. I’d say the industry overall is doing pretty well at these prices,” the mining executive said

Barrick’s copper business consists of the Zaldívar copper mine in Chile and the Lumwana copper mine in Zambia. The Jabal Sayid copper mine in Saudi Arabia is under construction and expected to begin output in the second half of 2012.

Barrick continues to grow its massive Lumwana copper deposit in Zambia, after expanding the resource last year from 11 billion lbs to over 18 billion lbs at the end of the year, Regent said.

“So, it’s grown significantly and we think there’s continued upside. It is a huge copper deposit and one we’ll be mining for generations,” he said, adding that he thinks copper demand will keep up with that expansion.

On its Website, Barrick posted its 2012 copper production outlook at 550 million to 600 million lbs at total cash costs of $1.90 to $2.20 per lb. In 2011, copper production was 451 million pounds at total cash costs of $1.75 per lb.

Regent said Barrick sells its copper in two forms--about half in concentrate form to smelters, who then sell it on to their customer base. The other half is sold in cathode form, which will end up being sold to customers or markets.

“I think, at the end of the day, you always have an outlet for your copper. You can sell it to LME warehouses. So, generally speaking we continue to be very constructive on the copper price.”

Follow Reuters Summits on Twitter @Reuters_Summits

Reporting by Carole Vaporean; Editing by Bob Burgdorfer

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