Lisa Wright is a business reporter with the Toronto Star, which has the largest circulation in Canada. The paper has an enormous impact on Canada’s federal and provincial politics as well as shaping public opinion. This article was originally published December 19, 2010.
“Underneath the nickel contact zone [in Sudbury] are these amazing copper deposits. And
when I say amazing, I mean three times the grade of the Congo. These are high, high grades.
Generally speaking in copper mining, a big open pit mine with 1 per cent would be a world
class, great type of deposit. We’re mining on average 9 per cent but sometimes up
to 20 per cent.” (Quadra FNX Derek White – Dec/19/10)
With prices soaring, Canadian miners like Quadra FNX are back on the radar
There’s an old saw that over every bull market is a copper roof – and beneath every bear market is a copper trough.
In other words, the price of copper is a reliable barometer of market strength.
The industrial metal is considered one of the best signals of economic activity since it’s the bloodline of electrical conductivity and a key component in all construction.
Copper is soaring to the rooftop again with the red-hot base metal hitting a record $4.18 (U.S.) a pound in New York last week. The last time it came this close to a record high was just before the economy hit the skids in 2008, which then promptly dragged it down to a lowly $1 a pound.
The high price is not great news for big buyers like China. Nor is it nice for churches, cemeteries and cars, which have become targets lately for their scrap copper content, which thieves sell on the Asian black market as a substitute for the expensive stuff.
But it bodes well for copper mining companies like Quadra FNX Mining Ltd., which formed after the merger of Vancouver’s Quadra and Toronto’s FNX last May to become a leading producer of the rusty red metal.
The Toronto miner hopes to capitalize on continuing high copper prices with its coveted Sierra Gorda site in northern Chile, which will cost an estimated $2.5 billion to build into a mine. The growing firm has many suitors knocking on its door to get a piece of this potentially large copper development, which could be up and running by early 2014.
Quadra FNX already mines for copper and nickel – but mainly the former – in Sudbury and is investing another $200 million in expansions and exploration in the metals-rich area.
Quadra’s executive vice-president of corporate development Derek White – a Vancouver-born geological engineer—talked to the Star about copper’s comeback, and why Sudbury should be synonymous with copper as well as nickel.
Why should investors pay attention to copper?
Copper is a metal that is used for a lot of different purposes. It’s the best conductor of electricity in the world. So when countries are building a lot of infrastructure, they consume copper in a big way. The issue for us in today’s world looking at 2010 to 2020 is that China will consume a huge amount of infrastructure, and that will require a lot of copper.
What are the fundamentals driving the price?
As copper prices started to rise in 2005, people thought well maybe this is short term and it’s not going to last too long. And then when the financial crisis happened in 2008, everyone said ‘told ya so.’ But the supply-demand dynamics are so different right now. There is such a shortage of supply and such a growing demand that is being driven by people like the Chinese.
For the rest of this article, please go to the Toronto Star website: http://www.thestar.com/business/companies/article/908928–copper-s-big-comeback