By Laura Clarke
SANTIAGO, Chile- Global copper demand will rise 3.2% on average
each year between now and 2025, sustained by Chinese demand, the
world's second largest copper producer, Freeport-McMoRan Copper
& Gold Inc (FCX), said Wednesday.
Javier Targhetta, Freeport's Senior Vice President of Marketing
and Sales said that despite market concerns on a slowdown in
China--the world's top consumer of the metal--it is inaccurate to
talk of a winding down of Chinese consumption, particularly as
regards copper.
Analysts have said that a cooling of the Chinese property market
could have negative implications for the nation's copper demand, as
the metal is largely used in the electrical and construction
sectors, each of which accounts for around a third of total copper
usage.
However, China will remain a key driver of demand growth in the
years ahead, Freeport foresees. Furthermore, there will be strong
growth in other emerging markets and a recovery in developed
markets, the company said.
"Numbers may say China is slowing down, but the basis is so much
bigger than it was ten years ago, especially for copper that I'm
not sure we should talk about a slowdown in the case of China," Mr.
Targhetta said. Between 1995 and 2010 Chinese copper demand grew
13%, and between 2010 to 2025 this should grow 5% annually
according to Freeport's figures.
Short term market uncertainties revolve around an uncertain
fiscal situation in the U.S. and the euro zone economy, Mr.
Targhetta said.
However, copper has various potential market growth areas, the
Freeport executive said.
"Copper's unique properties make it difficult to replicate, it
is a material of the future. Electric cars will use twice as much
copper as a regular car," he said. Major miners have cited energy
reform as a key growth area for global consumption during the
industry's annual gathering in Santiago for the Cesco and CRU
international copper conferences this week.
Freeport expects Chinese copper consumption will rise to 12.7
million metric tons a year by 2020, from around 8.2 million tons in
2012. European demand is seen growing to 3.2 million tons in this
period from 2.9 tons, while falling to 12% of total global
consumption from 15% in 2012.
Similarly, the company expects U.S. demand to grow to 3.2
million tons in 2020, accounting for 12% of global demand, from 2.8
million tons in 2012, or 14% of global demand.
While Japanese and South Korean demand is seen remaining largely
unchanged, reducing their percentage of global copper demand,
elsewhere in Asia some other nations including Bangladesh should
boost copper demand, he said.
"Urbanization has been the main driver of rising incomes and
this will propel 500 million people into the world's consuming
class by 2025, so that's a big opportunity for us," Mr. Targhetta
said.
Production is today a bigger concern to the copper industry than
demand, he said, due to ore grades - which have fallen almost 50%
since the 1980s - strict environmental regulations, rising labor
costs and social security expectations and soaring production
costs.
Freeport, in a move to maintain output and boost its portfolio,
has expansion projects underway including its Morenci project in
North America which Mr. Targhetta said would start full production
by next year. The company is also exploring in Chile and at its
Tenke Fungurume operation in Congo.
Write to Laura Clarke at laura.clarke@dowjones.com.
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