Improved copper prices are welcome news for all copper producers. recently depressed prices had reached levels that threatened the viability of all but a few. The improved metal prices to around $0.75/lb. are nowhere near a windfall, however. They are not enough and too late to save thousands of jobs recently lost in Arizona.

ÙThe improvement in copper prices is, however, just what is needed to stimulate growth in hydrometallurgical extraction and recovery of copper,Ó said Hans von Michaelis, organizer of the annual Copper Hydromet Roundtable 99 industry workshop.

Reducing Copper Costs

A graph of metal prices normalized to 1960=100 compiled by the World Bank shows the bottom end of the price cycle has been declining steadily over the last four decades. In metal market cycles, prices generally bottom when enough higher cost production closes to balance supply with demand. The declining bottom end of the price cycle is indicative of steadily reducing cash costs of producing metals.

Every copper producer has been fighting to survive by reducing its costs. Management rationalization, and technology improvements, have resulted in one more round of cost cutting.

Copper smelters have reportedly slashed smelting and refining charges. One smelter even took copper concentrates at a zero smelting charge recently to secure adequate sulfide "fuel" for its operations. Clearly the copper smelting and refining industry cannot survive under current pricing. What this means is that eventually copper prices will have to move back up to sustainable levels.

With capital costs of over $3,500 per annual ton of copper production even at very large scale of operation, it is unlikely many new copper smelters will be constructed for some time in the absence of much higher sustainable copper prices. This creates a window of opportunity for less capital intensive hydrometallurgical plants to be installed. Hydrometallurgical processes can be installed at lower capital cost and on a smaller scale suitable for installation at or near minesites.

Reprinted with permission of the Mining Opportunity Bulletin.