NEW YORK Volatility in
the copper market is likely to continue in the short term due
to macroeconomic factors, even as the long-term growth of the
industry is assured, according to a top executive at Rio Tinto
"While we expect continued
volatility in the short term, the copper markets
long-term fundamentals are robust," Andrew Harding, chief
executive officer of Rio Tinto Copper, said at Dahlman Rose
& Co.s third annual Global Metals, Mining and
Materials Conference in New York.
Even while most economic
statistics "indicate that were going through a period of
painful slowdown, particularly in Europe," and the current
market weakness could continue into the beginning of 2013, some
of the negative short-term economic factors are already showing
signs of lifting, he said.
"The recent deceleration in the
Chinese economy is showing signs of stabilizing," Harding said,
noting that the full extent of recently announced stimulus
measures might not be seen until after the countrys
The global copper market likely
will be in a slight surplus for the next couple of years before
demand growth and supply cutbacks will again result in a tight
market, he said.
In the long run, growth from
emerging markets like China will continue to increase copper
demand, Harding said. "As billions of people urbanize across
the globe, demand for Rio Tintos products will grow. The
electrification and urbanization of emerging markets will drive
copper demand growth through the next decade," he added.
Coupled with growing demand,
long-term supply constraints also should keep prices at high
levels. "Prices will need to remain robust to incentivize
future development," Harding said, adding that about 1.8
million tonnes of copper production will need to be replaced by
2016 due to mine closures, even as mine development costs
continue to increase.
Rio Tinto is less than two
months away from starting up its Oyu Tolgoi copper-gold project
in Mongolia, with commercial production expected to be reached
in the first half of 2013. The mine is expected to produce
425,000 tonnes of copper annually at full capacity.
Recent saber rattling by some
Mongolian political groups about resource nationalism are
unlikely to affect the project, Harding said. "I have full
confidence that the investment agreement (with the Mongolian
government) is highly respected," he said.
Rio Tinto will start the
molybdenum autoclave at its Utah copper-molybdenum mine in the
first half of 2013, which will improve recovery grades and
allow the facility to process lower grades of molybdenum,
according to Harding.