NEWS
Copper prices soaring to 10-year high on rising demand
Price of Copper stormed higher averaging $ US10,008 ($ 12,868 ) per tonne on the London Metal Exchange as the red metal inches closer to its highest price since 2011 . While rising close to its $ US10,190 record , copper closed at $ US9990 recently . Demand has risen due to economies rebounding from the COVID-19 pandemic across the globe .
The rally in base metals is driven by depleted copper inventory versus a strong post-COVID-19 demand as the world economy recovers from the pandemic and relatively low global inflation expectations , Shi Lin , an analyst from Huaan Securities .
In April , Goldman Sachs stated that “ copper is the new oil ”, anticipating a demand increase by as much as 900 per cent ( 8.7 million tonnes ) by 2030 . “ The critical role copper will play in achieving the Paris climate goals cannot be overstated . Without serious advancements in carbon capture and storage technology in the coming years , the entire path to net zero emissions will have to come from abatement – electrification and renewable energy ,” Goldman Sachs stated in the report .
BHP president minerals Americas Ragnar Udd stated that electronic vehicles ( EVs ) would use four times as much copper as petrol cars . “ Policy signposts for rapid EV adoption were distinctly favourable over the last 12 months and we have revised our internal
EV penetration forecasts upwards ” Udd said in April .
“ These vehicles use four times as much copper as petrol-based cars , and they will also need more infrastructure to connect charging stations to the grid . A Reuters poll has anticipated that copper prices will likely stall in the second half of 2021 .
According to Reuters , Chinese officials have warned a cap will be placed on high commodity prices to prevent inflation .
“ We estimate that by-mid decade this growth in green demand alone will match , and then quickly surpass , the incremental demand China generated during the 2000s ,” Goldman Sachs stated .
“ Ripple effects into non-green channels mean the 2020s are expected to be the strongest phase of volume growth in global copper demand in history .”
FQM ’ s Sentinel copper mine meets production projections
First Quantum Minerals ’ Sentinel copper mine , in Zambia , has met the expectations set for the first quarter of this year with production having increased by 3 % year-onyear . The company pointed out that innovation helped ensure the robust management of costs , reducing the unit cost of production , but savings were outweighed by a dramatic rise in mineral royalty tax as a result of high world copper prices that pushed the country ’ s largest taxpayers to the highest level of the tiered tax system .
The 58 252 t of production during the quarter at Sentinel was despite repair work on the mine ’ s ball mill limiting throughput and heavy rainfall recorded in the North Western province , says First Quantum . Sentinel ’ s total production amounted to 28.4 % of the mining company ’ s global production of 205 064 t , while the mining unit ’ s total copper sales volume increased by 45 %.
“ Sentinel mine delivered in line with the company ’ s overall plan despite the heavy rains experienced in the quarter . With our continued low costs and the strong copper price , we generated significant cash flow ,” says First Quantum country GM Kingsley Chinkuli .
The continued increase in copper production at Sentinel is a direct result of First Quantum ’ s investments into its operations , notes Chinkuli . The investments have led to a significant reduction in the unit cost of production . “ At our operations , we aim to be efficient while also living up to the expectations of all our stakeholders ,” he says . In the third quarter of 2020 , Sentinel achieved its highest ever quarterly production of 70 829 t and recorded low cash costs .
Zambia uses a sliding scale for the determination of mining royalty tax rates , linked to the prevailing copper price . The scale is adjusted so that royalties are paid at higher levels as commodity prices climb and are reduced as prices fall .
Chinkuli says that , for the company to continue being a major contributor to the Zambian economy , the government needs to put in place a competitive mining sector tax regime to attract foreign direct investment that should seek to adequately compensate the country while remaining internationally attractive and competitive .
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