Copper Balance Seen Prolonged on Mine Delays: Antofagasta

Antofagasta Plc (ANTO), the copper company controlled by Chile’s billionaire Luksic family, predicts global supply and demand will remain in balance longer than previously thought on project delays and an increase in orders.

The copper market’s move into surplus estimated by the end of this year probably won’t happen until the second half of next year, Chief Executive Officer Diego Hernandez said yesterday in an interview in Santiago. Chinese manufacturers are building their stocks of copper at current prices, he said.

“Some of the projects that will come into production will take a little longer,” he said. “That’s one factor. The other is because of rebuilding inventories or increasing consumption, we have seen slightly more purchases of copper on the market.”

Copper demand probably will continue to grow an average 3 percent to 3.5 percent in the coming years, underpinned by Chinese urbanization, and a lack of new mining projects will eradicate the market surplus from 2016, Hernandez said.

He declined to give an estimate on copper prices.

Antofagasta rose 4 pence, or 0.5 percent, to 809 pence at 2:25 p.m. in London. The shares have slumped 6 percent this year as the metal’s price lost 12 percent on increasing supplies.

The global supply of mined copper will expand at least 4 percent annually from 2012 to 2016, Standard Bank Plc said in a report in October, compared with less than 1 percent in four of the six years through 2012.

Warehouse Declines

Inventories of the metal used in electrical wire held in London Metal Exchange monitored warehouses have declined more than 30 percent since June, according to data compiled by Bloomberg.

Copper futures for March delivery rose 0.4 to $3.18 a pound at 9:37 a.m. on the Comex in New York.

State-owned Codelco started its Ministro Hales mine in Chile’s Atacama Desert this month. London-based Rio Tinto Group started its Oyu Tolgoi mine in Mongolia earlier this year.

Antofagasta plans to produce 700,000 metric tons of copper this year, compared with 709,600 tons in 2012, Hernandez said in an Aug. 27 interview. The Santiago-based miner whose shares trade in London is investing $1.9 billion to start its Antucoya mine in Chile in 2015. With Antucoya partner Marubeni Corp. (8002), Antofagasta secured $650 million in loans Nov. 6 from a group of banks including Japan Bank for International Cooperation and Export Development Canada.

The Luksic Group owns about 65 percent of Antofagasta, which also has railroad and water assets in the Atacama Desert. The company stems from the Antofagasta Railway Co. listed in London in 1888. Hernandez, 65, was previously CEO of Codelco.

To contact the reporter on this story: Matt Craze in Santiago at mcraze@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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