Copper Mine Spending Seen Sinking Below Financial-Crisis Levels

Copper Ore Mining At KGHM Polska Miedz SA's Underground Mine

Copper Ore Mining

Photographr: Bartek Sadowski/Bloomberg
  • Mining-project investment seen at lowest since 2007 next year
  • Copper prices fell for five quarters, longest slump since '96

Mining investment next year will tumble to the lowest level since before the global financial crisis, giving some vindication to long-term copper bulls.

The amount companies spend to expand mining projects next year will fall to $11.1 billion, the lowest since 2007, from a high of $33.7 billion in 2012, according to data from Citigroup Inc. Such investment had climbed 15-fold in the 10 years leading up to the record, as demand from China surged and producers encouraged by rising prices expanded output.

This year, so-called expansion capital expenditureswill be down about 50 percent from the 2012 high.

Copper prices slumped for five straight quarters though September, the longest streak since 1996, as slowing economic growth in China fueled concern that production would exceed demand. With output cuts announced by Glencore Plc, Freeport-McMoRan Inc. and other producers signaling tighter supplies, the metal has posted two straight weekly gains for the first time in more than three months.

In late August, Phoenix-based Freeport announced plans to cut about 10 percent of its staff and contractors at U.S. mining operations, while Glencore has said it will close copper mines in the Democratic Republic of Congo and Zambia that account for about 2 percent of global supply.

Citigroup forecasts prices will average $5,550 a metric ton in the fourth quarter, up from a closing price of $5,273 on Tuesday, “with a more constructive outlook for next year,” the bank said in a report Oct. 13. 

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