REFILE-UPDATE 1-Xstrata sees China copper demand rebounding, sticks to expansion
(Refiles to fix spelling of brakes in first paragraph)
* Xstrata expects to lift copper output by about 60 percent over three years
* Says earmarking $7 bln to boost copper division
* Miners BHP, Rio Tinto have sounded more cautious note on expansion
* Chinese buyers of iron ore, coal see defaults -traders
By James Regan
SYDNEY, May 22 (Reuters) - Chinese demand for copper is likely to improve in the second half, the head of Xstrata's copper unit said on Tuesday, as the miner pledged to lift output by about 60 percent over three years after some rivals have put the brakes on expansion.
Charlie Sartain said the company had earmarked roughly $7 billion to beef up its copper division, mainly in Chile, Peru and Argentina, and also in Australia.
"We typically see a cyclical return to demand in the second half of the year in China. We still have a view that the first half was always going to be slower from a copper demand point of view," he told a Latin American investment conference in Sydney.
Recent data from China, the world's top consumer of base metals, iron ore and coal, show its economy is cooling at a faster-than-expected pace prompting its premier, Wen Jiabao, to call on Sunday for new measures that would bolster growth.
"From a market point of view, Europe is relevant, but not a major copper consumer. We have factored in very flat market conditions in Europe. We see some improving economic conditions in the U.S. and that is from the perspective of copper consumption there," he added.
"We have an active growth plan to grow our copper production by 60 percent from projects already in our pipeline," he said.
His comments come after some miners have sounded a cautious note on expansion.
Slumping commodity prices and escalating costs have squeezed cash flows, pushing BHP Billiton to join rival Rio Tinto reconsidering the pace of their long-term expansion in countries such as Australia and Canada.
BHP, the world's biggest miner, put the brakes on an $80 billion plan to grow its iron ore, copper and energy operations.
Indicating the stress facing commodities markets, Chinese buyers are deferring or have defaulted on coal and iron ore deliveries following a drop in prices, traders said.
But some miners continue to see a strong outlook and the world's largest iron ore miner, Brazil's Vale, said on Monday it was selling iron ore about as fast as it could mine it despite China's slowdown.
"We don't have any problem concerning orders, we continue to sell all the amounts the company is producing. The scenario we see continues positive," Vale investor relations chief Viktor Moszkowicz said at an investment seminar in Rio de Janeiro.
At the same seminar, though, Brazilian steelmaker Usiminas said it was scaling back plans to expand its own iron ore mining operations.
Xstrata is the world's fourth-largest copper miner, producing 889,000 tonnes of copper in concentrate and 651,000 tonnes of copper cathode last year.
Copper prices are down some 10 percent since April, weighed down by economic uncertainty in Europe and China compounded by mounting unsold inventories.
Xstrata has forecast a dip in first-half copper output as its Collahuasi Mine in Chile, a joint venture with Anglo American , faces declining ore grades, before picking up in the second part of 2012. (Writing by Ed Davies; Editing by Eric Meijer)
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