Copper supply glut seen tripling as prices sink 10%

Five Years

Codelco, owned by Chile’s government, plans to invest $4 billion to $5 billion annually in the next five years to boost output, Chief Executive Officer Thomas Keller said in a Oct. 7 interview in London. The Santiago-based company’s $3 billion Mina Ministro Hales is scheduled to open later this year, eventually adding another 183,000 tons to global supply.

Mina Ministro Hales and Chinalco Mining Corp.’s Toromocho mine in Peru will be among the 10 biggest capacity additions next year, adding a combined 811,000 tons of output, according to Morgan Stanley.

Freeport-McMoRan will report a 15% drop in profit to $2.59 billion this year, the mean of nine analyst estimates compiled by Bloomberg shows. Shares of the Phoenix-based company, which gets 79% of its revenue from copper, fell 2.2% to $33.44 in New York trading since the start of January. They will reach $36.94 in 12 months, according to the average of 16 analyst forecasts.

Processing Ore

Aurubis AG, Europe’s largest producer of refined copper, cut its annual profit forecast on Aug. 13, citing price swings and weaker European demand. The Hamburg-based company should be able to charge mining companies more for processing ore next year as mine output expands, CEO Peter Willbrandt said in an interview in London on Oct. 7. Higher returns for smelters worldwide may accelerate the surge in supply.

“As you get into the end of the year, the surplus will become more apparent,” said Gayle Berry, an analyst at Barclays in London who has covered metals for more than a decade. “Things are looking better from a demand perspective but you look at supply, copper mine supply is growing at the fastest that it has in almost a decade.”

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