Rio Sees China Copper Use Growing More Than 8% a Year
Stock Chart for Rio Tinto PLC (RIO)
China’s copper demand will probably grow more than 8 percent annually in the next five years as the country uses more of the metal to develop its power infrastructure, Rio Tinto Group’s head of copper said.
Continuing Chinese copper demand will reduce stockpiles of the metal in the second half of this year, Andrew Harding, the head of Rio Tinto Group’s copper division, said in an interview in Santiago today.
Copper for delivery in three months on the London Metal Exchange has declined 4.7 percent in April on concerns that Chinese growth will slow. China is the world’s largest copper user, buying more than a third of global output.
Copper futures for July delivery climbed 0.5 percent to settle at $3.654 a pound at 1:12 p.m. on the Comex in New York. Earlier, the price fell as much as 1.2 percent. The metal has gained 5.7 percent this year.
Chinese copper purchases probably will recover in the second half as stockpiles run down, helping generate another deficit of copper cathodes, Charlie Sartain, head of Xstrata Plc’s copper division said today. Demand may exceed supply by 500,000 metric tons this year, Vanessa Davidson, a London-based analyst at metals consultancy CRU said in a presentation today.
China’s spending on infrastructure including its power grid is “far from complete”, Diego Hernandez, chief executive officer of Chile’s state-owned Codelco, the world’s largest copper producer, said today. Global output will rise to 22 million metric tons if all expansions planned by mining companies go ahead, leading to a supply excess, Hernandez said.
Harding said he is “confident” that Rio will achieve its target of starting the Oyu Tolgoi copper project in Mongolia in the first half of next year as the country negotiates a power agreement with neighboring China. The opening of Oyu Tolgoi, which will cost $6 billion to build, won’t “dent” prices because of rising demand, he said.
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