* Xstrata expects to lift copper output by 60 pct over 3
years
* Says earmarking $7 bln to boost copper division
* Miners BHP, Rio Tinto have sounded more cautious note on
expansion
* Chinese buyers of iron ore, coal see defaults -traders
By James Regan
SYDNEY, May 22 (Reuters) – Chinese demand for copper is
likely to improve in the second half, the head of Xstrata’s
copper unit said on Tuesday, as the miner pledged to
lift output by about 60 percent over three years after some
rivals have put the brakes on expansion.
Charlie Sartain said the company had earmarked roughly $7
billion to beef up its copper division, mainly in Chile, Peru
and Argentina, and also in Australia.
“We typically see a cyclical return to demand in the second
half of the year in China. We still have a view that the first
half was always going to be slower from a copper demand point of
view,” he told a Latin American investment conference in Sydney.
Recent data from China, the world’s top consumer of base
metals, iron ore and coal, show its economy is cooling at a
faster-than-expected pace prompting its premier, Wen Jiabao, to
call on Sunday for new measures that would bolster growth.
“From a market point of view, Europe is relevant, but not a
major copper consumer. We have factored in very flat market
conditions in Europe. We see some improving economic conditions
in the U.S. and that is from the perspective of copper
consumption there,” Sartain added.
“We have an active growth plan to grow our copper production
by 60 percent from projects already in our pipeline,” he said.
Xstrata sells 30-40 percent of its copper to China, its
largest customer.
His comments come after some miners have sounded a cautious
note on expansion.
Slumping commodity prices and escalating costs,
particularly in Australia, have squeezed cash flows, pushing BHP
Billiton to join rival Rio Tinto reconsidering
the pace of their long-term expansion.
BHP, the world’s biggest miner, put the brakes on an $80
billion plan to grow its iron ore, copper and energy operations.
Australia has more than $400 billion in resource projects
planned or in progress and mining contractors say demand for
projects remained strong.
“We’re still seeing a nice healthy addressable market going
forward,” Hamish Tyrwhitt, the chief executive of Leighton
Holdings, Australia’s top contractor, told reporters.
Any delays in new projects may actually make the heavy load
of projects it is tendering for more manageable, he added.
“We have A$30 billion ($29.57 billion)of tenders we’re
undertaking and over A$8 billion where we’re in a preferred
position,” Tyrwhitt said, adding Leighton preferred to have
capital expenditures spaced out.
Indicating the stress facing commodities markets, Chinese
buyers are deferring or have defaulted on coal and iron ore
deliveries following a drop in prices, traders said.
VALE SELLING ALL IT PRODUCES
But some miners continue to see a strong outlook and the
world’s largest iron ore miner, Brazil’s Vale, said
on Monday it was selling iron ore about as fast as it could mine
it, despite China’s slowdown.
“We don’t have any problem concerning orders, we continue to
sell all the amounts the company is producing. The scenario we
see continues positive,” Vale investor relations chief Viktor
Moszkowicz said at an investment seminar in Rio de Janeiro.
At the same seminar, though, Brazilian steelmaker Usiminas
said it was scaling back plans to expand its own iron
ore mining operations.
Xstrata is the world’s fourth-largest copper miner,
producing 889,000 tonnes of copper in concentrate and 651,000
tonnes of copper cathode last year.
Copper prices are down some 10 percent since
April, weighed down by economic uncertainty in Europe and China
compounded by mounting unsold inventories.
Xstrata has forecast a dip in first-half copper output as
its Collahuasi Mine in Chile, a joint venture with Anglo
American, faces declining ore grades, before picking up
in the second part of 2012.
