Risks to the upsideAnother positive outlook for copper prices by Freeport MacMoran CEO.
Looks like CUM could benefit even more from a strong price recovery if they manage to start production before mines closed during this down turn can restart production. In any case, this would be good if the CEO of the world's biggest copper producer is right with his prediction for copper. This might also be one of the reasons why Mitsubishi wants to secure copper supply by investing in CUM at this time.
Chinese buying to aid copper demand: Freeport
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The CEO warned of risks to the upside, referring to price moves in 2003 when global recession drove copper down to about 75 cents a lb but subsequent economic recovery doubled prices by the end of 2004 as a a case study for what the copper industry will face as China and the developed world gear up.
"We continue to be very positive about being in the copper and molybdenum business, even though prices are weak."
Adkerson pointed out that historically low exchange and consumer inventories around the world and supply issues unrelated to price -- low ore grades at aging mines, equipment shortages and challenges of operating in politically unstable regions -- should support prices.
"As developing world economies begin to recover and as China and the undeveloped world builds infrastructure, the world is going to have strong demand for copper and the industry will be challenged to meet that demand," he said.
When demand does pick up, he said, it can take as long as two years between the time when Freeport decides to restart operations and output reaches previous levels.
"If we were to make the decision in the second half of '09, it would take a couple of years. The longer it goes the more that lag time gets extended," he said.
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To read the full story : https://uk.reuters.com/article/governmentFilingsNews/idUKN2253316720090422?pageNumber=2&virtualBrandChannel=0