Rio Tinto forecasts surge in world demand for refined copper
The Australian reported that global demand for refined copper is forecast to rise by more than 40% to 27 million tonnes by 2020 and the massive Mongolian gold and copper Oyu Tolgoi project is strategically positioned to capitalize on that increase as it grows to become a top five global copper producer. Mr Cameron McRae CEO of Oyu Tolgoi project said in a presentation that can be found on Rio’s website that there is significant scope for demand growth over the medium to long term as India and China continue to grow. Mr McRae noted that China’s 2010 gross domestic product per capita was only USD 7000 compared to USD 43,000 for the US. China is forecast to build between 4 million and 5 million new buildings between 2005 and 2025 as it continues to undergo fast paced urbanization.Rio Tinto is the operator of the Oyu Tolgoi project and its indirect owner through its 48.5% stake in Canada based Ivanhoe Mines. Ivanhoe owns a 66% stake in Oyu Tolgoi while the Mongolian government owns the remaining 34%.
Rio Tinto said that the Oyu Tolgoi project alone would boost Mongolia’s economy by 35% by 2020 and account for a third of the country’s economy. It will boost the country’s average economic growth rate to 12.7% between 2013 and 2020, versus 7.7% without the project.
Analysts said that copper supply is expected to lag demand in the near term as mining companies seek to expand production capacity and develop new mines. The presentation didn’t reveal Mr McRae’s views on supply growth but it noted that 14% of reported global copper resources are in Asia and 13% of the world’s deposits account for 77% of the those resources.
According to Rio Tinto, Oyu Tolgoi is seen as one of those large deposits and is forecast to become a top 5 copper producer which cited Brook Hunt’s 2013 mine production data and Oyu Tolgoi’s full production design capacity. The Oyu Tolgoi project is forecast to start commercial production in the H1 of 2013 and is expected to be able to produce 450,000 tonnes of copper and 330,000 troy ounces of gold annually.