SANTIAGO, Chile Global
copper concentrate supply could be facing a 2012
shortfall of up to 300,000 tonnes against smelting capacity,
according to Freeport-McMoRan Copper & Gold Inc. senior
vice president of sales and marketing Javier Targhetta.
"I think (concentrate supply)
will be rather tight, swinging from tight to balance from the
next few years," he told AMM in an interview Tuesday
in Santiago during Cesco Week events hosted by the
countrys Center for Copper and Mining Studies.
The concentrate market is
expected to remain tight for several years as new projects are
delayed and ore grades drop at existing mines, he said.
"As much as companies are
developing projects and fostering organic growth, I think that
there are limitations in catching up," Targhetta said.
As concentrate supply grows
increasingly tight, a number of miners have moved to negotiate
copper concentrate treatment and refining charges (TC/RCs) more
frequently, but Targhetta said Freeport plans to continue to
negotiate its TC/RCs on a yearly basis.
"That approach might be
happening by different companies, but this year with the
companies that did short-term negotiations there was a $1 or $2
difference between their price and ours. Its so little
difference it does not matter anyway," he said.
While a number of products, like
iron ore, have moved to quarterly pricing, this isnt an
approach Freeport wants for copper, Targhetta said. "I believe
in long-term business and long-term contracts," he added.
At the same time, Freeport
stands by its decision to grow organically rather than through
acquisition, Targhetta said. "Organic growth is a much more
certain investment," he said. "By acquiring, you are giving
value away to other shareholders; by growing what you already
have, (it) gives value to your shareholders."
His comments came less than a
day after Corporación Nacional del Cobre de Chile
(Codelco) chief executive officer Diego Hernandez said the
trend is moving back toward acquisitions rather than building
new projects (AMM, April 18).
"We are happy with our portfolio
distribution," Targhetta said, noting that Freeport remains
optimistic about copper demand in the long term.
"Its been flat to
declining in Europe and going up in the United States, but
China is more of a roller coaster," he said. "In the long term,
we are very positive; we think there is a lot to be done in
The recent slowdown in Chinese
activity isnt concerning, as the company is focusing
instead on the longer-term needs of the country, Targhetta
"Weve seen the level of
inventories dropping a little or staying the same during the
biggest crisis in 100 years, (and) that says a lot," he