The price of copper and other base metals is highly dependent on the construction and infrastructure industries. Copper prices, stagnant for the last couple of years, suffered a sudden plunge last week. Chinese demand severely impacts copper prices, given that the country alone consumes almost half of the worldwide demand, and its manufacturing activity recently reached its lowest point in five months. Mexico Mining Review gives an overview of the brown metal’s behavior and key basins in the country.
THE BROWN METAL AND MEXICO
Grupo México subsidiary Americas Mining Corporation (AMC) is by far the leader in copper production in Mexico, with its Buenavista del Cobre and La Caridad mines, both in Sonora, producing 316,000 tons and 104,900 in 2016, respectively. Its El Arco mine in Baja California is a world-class deposit that is still in development, according to SGM. Once it reaches production, it has an expected output of 190,000t/y. The state of Sonora has four more world class copper deposits other than Buenavista and La Caridad: Pilares (also operated by AMC), Minera Frisco’s María, Milpillas – a Peñoles mine, and Piedras Verdes, which is owned by Invecture Group. The states of Chihuahua, Sinaloa, Durango, San Luis Potosi, Zacatecas, Hidalgo and Michoacan also have deposits of this ore.
Grupo México retains control of more than three-quarters of Mexico’s total copper production. The remaining 23.4 percent is split between Industrias Peñoles, Nemisa, Cobre de Mayo, Minera Frisco, Capstone Mining and Aurcana Corporation.
COPPER PRICE PLUNGES: AS CHINA GOES, SO DOES COPPER
China alone demands 45 percent of the brown metal. During the first half of 2017, China imported 1.85 million tons of copper scrap and 1.54 million tons of refined copper. In July 2017, thanks to a positive economic Chinese forecast, copper reached its highest level in two years. But according to mining.com “copper futures trading in New York cratered on Tuesday on doubts about the strength of Chinese demand for the metal, an improving supply picture and a jump in warehouse stocks of the metal.” This is mainly caused by a decrease in Chinese manufacturing, as “the Caixin China General Manufacturing Purchasing Managers’ Index (PMI) dipped to 50.8 in November, down from 51 the previous month and the lowest reading since June.”
Also, Capital Economics predicted copper prices will edge low over the next quarter and the rest of this year the supply of the metal will decline significantly. The forecast estimates a drop in primary copper production of 3.5 percent and a recovery of 3.8 percent during 2018. Mines in Peru and Russia are expected to ramp up output. As for 2019, the firm predicts a 2 percent increase in output thanks to the advanced-stage development of various projects in Mongolia, Panama and Zambia.