- London copper (HG1:COM) closes +1.2% to $9,171/lb., as prices for the metal remain at near-decade highs with consumption projected to outstrip near-term supply while many countries look to lift economic growth.
- Southern Copper (SCCO +1.4%), one of the world's largest copper companies, says the market probably will not see new supply for another 8-10 years.
- Prices already are well above the incentive level for new projects that would help ease the supply squeeze, but it can take twice as long to build mines now than in the past, Southern Copper CFO Raul Jacob tells Bloomberg.
- "If this price level holds, we should see announcements of new projects coming in the market," Jacob says, but the lag time from decision to production will make the copper price cycle "a little bit longer than in the past."
- The next generation of copper mines must contend with lower ore quality that can push up costs while adhering to higher environmental and social standards, which the CFO says is part of the reason Southern Copper will not be accelerating its expansion plans to tap higher prices.
- Current copper prices indicate a record year of earnings at ~$5B, Jacob says.
- Other relevant tickers include FCX, TECK, TRQ, OTCPK:FQVLF, OTCPK:CPPMF
- ETFs: COPX, CPER, JJCTF, JJC
- Freeport McMoRan CEO Richard Adkerson recently said the company was set to approve expansions at several of its U.S. copper mines to capitalize on surging demand.