Copper prices will increase this year as global copper supply lags demand because of labor strife and depleting mines, Southern Copper Corp.’s Financial Planning Manager Raul Jacob said.
Mines will need to produce an additional 430,000 metric tons of copper in 2012 to meet demand, Jacob said. Southern, the largest copper producer in Peru and Mexico and also a silver producer, will increase output by 3.8 percent to 610,000 metric tons this year, he said.
“Production has underperformed badly due to labor unrest, power shortages, adverse weather conditions and ore-grade declines,” Jacob said today on a conference call with analysts. “These events are likely to continue in 2012, maintaining tightness in the copper market.”
Workers in Peru, Chile, Bolivia and Indonesia held stoppages at copper, gold and zinc mines last year to pressure for better conditions and a bigger percentage of record profits after metal prices surged. New York copper prices doubled over a two-year period through June 2011. Global mine output dropped by 200,000 metric tons in 2011, according to Barclays Capital.
Silver will see “strong” demand as an investor haven this year, Jacob said.
Southern Copper fell 3.3 percent to $33.69 at the close in New York.