The Swedish firm, mainly focused on copper and zinc, said the expansion of its Aitik mine had helped boost copper production by more than half in the period but borrowing costs had risen as a result of the expansion. It had also suffered higher costs due to the temporary shutdown of a smelter in May.

“The maintenance shutdown at Ronnskar is largely responsible for the deterioration in operating profit in comparison with the first quarter,” the company said in a statement, referring to the performance of its smelting business.

Boliden said output at its Aitik mine would reach full capacity of 36 million tonnes of ore a year by 2014, but said it had incurred higher interest costs on its investment.

Analysts said this and the smelter shutdown were weighing on Boliden shares.

“Estimates will be lowered partly because of … Aitik and partly because costs have been higher than expected,” said Fredrik Agardh, an analyst at Handelsbanken Capital Markets.

Boliden’s shares, down over 10 percent in the past month, dropped a further 4 percent on Monday to 83 crowns from 86 before the results were released.

Chief Executive Lennart Evrell said increased production volumes, the new Aitik facilities and the maintenance shutdown had increased costs by 503 million crowns compared with the same period last year.

METALS VOLATILE

Zinc prices have dropped sharply this year, with three-month zinc down 30 percent at the end of the second quarter from the end of 2009, partly due to excess production and stock. The outlook for copper prices is also uncertain. [ID:nLDE66415K] [ID:nLDE6661FD]

Boliden said its zinc output was unchanged from the first quarter, while copper production had risen 51 percent.

“There is uncertainty regarding metal prices — no positive trigger in that area — so I expect quite a few downward revisions of estimates based on this report,” said an analyst who asked not to be named.

Operating profit at the firm came in at 1.12 billion crowns ($153 million), slightly below the average forecast for 1.3 billion crowns given in a Reuters poll of 10 analysts. Quarterly revenue came in at 8.9 billion crowns, which compared with an average forecast of 9.2 billion forecast.

Copper output at 321 132 t from January to May was higher than the 276 230 t the southern African country produced during the same period last year.

The central bank said in a fortnight report that copper exports increased marginally to 345 329 t in the first five months of 2010 versus 244 873 t in 2009.

Cobalt production increased to 3 210 t in 2010 from 1 613 last year and exports shot up to 3 198 t to May this year from 1 587 t in 2009, the Bank of Zambia said.

Chibamba Kanyama, an economist at the country’s main think-tank, the Economics Association of Zambia, told Reuters copper output had risen following the opening of new mines like Equinox Minerals’ Lumwana mine and the increase in copper prices

“It was not cost efficient to carry out mining activities in certain parts of the mines when the price of copper was low but with the rise in prices it is now profitable to carry out mining in areas that were considered expensive,” Kanyama said.

Kanyama said Zambia was likely to achieve its target to raise copper production to about one-million tons by 2011, from just below 700 000 t in 2009.

“Copper prices are cyclical and the mining companies are rallying behind the high price to maximize output before the cycle goes down,” Kanyama said.

Kanyama said cobalt output had almost doubled following the re-opening of Zambia’s largest cobalt producer, Chambishi Metals.

Copper mining is Zambia’s economic lifeblood and the mines are a major employer in the country of over 12-million people.

Foreign mining companies in Zambia include London-listed Vedanta Resources, Canada’s First Quantum Minerals, Glencore International of Switzerland and Metorex of South Africa.

Bell Equipment , which posted a net loss of R372m for the financial year to March , said the increase in the copper price, and the resultant surge in mining, meant a major increase in the use of its materials- handling equipment. The company is operating in the Democratic Republic of Congo.

CEO Gary Bell said that the copper mining sector provided “growth and long-term stability” for the company. The downturn saw Bell’s revenue fall by more than half in the year to December, from R5,46bn in 2008 to R2,7bn last year. It posted a net loss of R372m, from a profit of R514m.

“As the copper price is the lead indicator of economic recovery, it is safe to say that those companies experiencing the benefits of the high price are also recovering,” said Econometrix Treasury Management MD George Glynos yesterday.

Copper production increased due to demand from China, which consumes 45% of the world’s copper.

South African companies working in the Copper Belt in the Congo and Zambia benefited from this consumption as these African countries were important copper suppliers . This was owing to the low reserves of copper in large producing countries such as Chile, Peru and the US.

While SA’s heavy equipment suppliers to mines would feel the positive effects of a high copper price, other South African companies, especially those focusing on electronics and electrical equipment, suffered. These included electrical engineering company Reunert . “When the copper price increased, the rand increased, which puts manufacturing firms at risk,” said CEO Gerrit Pretorius.

The global copper price hit a high of 7900 a ton in April, and although the price had softened this quarter, it was expected to remain high for the next few years, said a mining analyst.

However, the analyst warned that copper was a volatile commodity, with prices anticipated to come down again in 2013. The analyst speculated that the demand from Western Europe and the US would start to slow in the next few years owing to a decline in infrastructure development.

Meanwhile, apart from the buoyant copper price, the industrial metals sector is expected to stay on a recovery path this year. Demand for such metals was expected to be stimulated by lean producer inventories , government stimulus programmes and Chinese consumption, analysts said. Global economic growth is starting to pick up as a result.

BMO Capital Markets global commodity strategist Bart Melek said that global industrial production was recovering from a 12,5% decline last year to a 3,2% rise this year .

Copperbelt Province Permanent Secretary Villie Lombanya told Reuters all the mines had returned to normal production after they replaced equipment damaged due to unstable electricity supply, soon after the power was restored.

Konkola, owned Vedanta Resources, said on Saturday it expected to resume full operations the same day after restarting a processing plant and its key Nchanga smelter.

First Quantum Minerals’ Kansanshi mine, Zambia’s largest single mine by output, resumed full production after losing nine hours of production during the power blackout, its spokesperson Godfrey Msika told Reuters.

Production also resumed at the Lumwana Mine owned by Australia’s Equinox Minerals and the Bwana Mkubwa plant, another First Quantum unit, officials at these mines told Reuters.

Other foreign mining companies operating in Zambia include Glencore International AG of Switzerland and Metorex of South Africa

For the first quarter, the company produced 23.2 million pounds of copper and 194,000 pounds of molybdenum.

Copper grade for the quarter was about 10 percent above life-of-mine average grade, Taseko said in a statement.

“In approximately six months, major construction projects will be complete and the targeted annual production level of 115 million pounds of copper will soon follow,” Chief Executive Russell Hallbauer said in a statement.
Taseko, whose assets include the Gibraltar copper-molybdenum mine and the Prosperity gold-copper project, had earlier said it sees 2010 production to exceed 80 million pounds.

Shares of the Vancouver-based company closed at C$5.44 Tuesday on the Toronto Stock Exchange.

Zambia has previously said copper production could hit 1.0 million tonnes by 2011 as new mines come on stream and expansions and upgrades take place at existing mines.

Its copper production declined to 54,518 tonnes in January this year from 62,621 tonnes in the same month last year, the central bank said on Tuesday.

Copper exports in January 2010 increased to 56,676 tonnes versus 55,199 produced in 2009, the Bank of Zambia (BOZ) said.

Economist Oliver Saasa said that despite the output fall Zambia would still produce more than 700,000 tonnes in 2010 as the price outlook appeared positive.

“The decline is insignificant and we still have a very long year to go,” Saasa, professor of economics at the University of Zambia, said.

Saasa said the future of both copper and cobalt mining was favourable as most of the mines had embarked on programmes of reinvestment after the global financial crisis.

“One only hopes that politics will not discourage further investment with the elections coming up next year,” Saasa said.

The drop in output was blamed on mine closures.

“There was no production at Luanshya mine, while production at Mufulira almost collapsed and there were problems at the Nchanga open pit and all this resulted in the low January copper output,” University of Zambia head of mining engineering Mathias Mpande said.

Some of the mines closed due to the global economic downturn.

Mpande said the resumption of operations by Zambia’s largest cobalt producer, Chambishi Metals, led to higher output of cobalt in January 2010 over the same month last year.

Cobalt production in January 2010 shot up to 734 tonnes from 367 tonnes in January last year and exports increased to 731 tonnes from 356 tonnes in 2009, the central bank said.

Cobalt production in 2009 rose to 5,879 tonnes from 4,617 tonnes in 2008, and exports rose to 5,868 tonnes in 2009 from 4,610 tonnes, the Bank of Zambia said.

Copper output in Zambia rose 14 percent to 697,860 tonnes last year.

Frederick Bantubonse, the general manager of the Chamber of Mines of Zambia, said that to boost output quicker, the southern African nation should restore investor confidence, which was eroded by the introduction of higher taxes in 2008.

Copper mining is Zambia’s economic lifeblood and the mines are a major employer in the country of 12 million people.

Foreign mining companies in Zambia include London-listed Vedanta Resources Plc, Glencore International of Switzerland and Metorex of South Africa.

Both affected plants will reopen once complete safety, operational inspections and remedial work is concluded.

Production will be increased at other Scaw facilities globally accordingly.

Scaw’s operations are part of Anglo American’s Other Mining and Industrial Business Unit.

“I am pleased to confirm that none of our employees and contractors working at the time of the earthquake was injured,” said Anglo American CEO Cynthia Carroll.

“Anglo American teams on the ground are in contact with local authorities and the central government to express our willingness to support affected communities.”

“We are committed to the reconstruction of areas impacted by this tragedy by ensuring that we can partner with in government in providing relief,” Carroll added.

Production was halted at the group’s operations due to power failures when the earthquake occurred.

Affected copper mining operations – Los Bronces, El Soldado and Mantoverde – were able to resume full and safe production during Sunday when power was returned to all operations.

And the group said it is expected that the Chagres smelter will resume full production by Wednesday following the resumption of full power supply.

“Lost copper production during the stoppage was limited to less than 1 500 tons.”

“Minor damage was reported at Anglo American’s copper mining operations,” the group said.

But at its Scaw Metals’ plant near Concepcion, considerable damage has been caused preventing the resumption of operations until further notice.

Power and other infrastructure in the Concepcion area is also affected.

The metal hit a five-week high at $7 600 (R58 520) a tonne in Asian trade.

The 8.8-magnitude quake which hit the South American nation early on Saturday and ensuing tsunamis killed more than 700 people in Chile and dealt a heavy blow to one of Latin America’s most stable economies.

Chile’s biggest copper mines slowly resumed operations on Sunday despite limited power supplies, which analysts say could hamper exports.

“The impact on copper production appears to be limited for now, but should not be insignificant in a copper market that continues to see a chronic underperforming supply-side,” said Standard Bank in a note.

The jump in copper prices to their highest in five weeks after the quake has likely tipped technical signals back into bullish mood, traders said.

PRICES

* Three-month copper on the London Metal Exchange was trading at $7 440 a tonne at 10:13 SA time compared with $7 195 at the close on Friday.

* Aluminium was at $2 148 a tonne from $2 133.

DATA/EVENTS

* US personal income/spending for January, 15:30 SA time.

* US institute of supply management February manufacturing index, 17:00 SA time.

* US January construction spending, 17:00 SA time.

MARKET NEWS

* The dollar index edged up 0.1 percent, supported at the margins by improving US economic data, while sterling fell to a nine-month low against the dollar and a one-year low on the yen on Monday, hurt by political uncertainty.

* Oil rose more than 1 percent and topped $80 a barrel on Monday, amid threats by Iran that it could cut off energy supplies to Europe, although prices later eased on worries about slowing demand in China.

* Asian equities were firm and European shares were higher in early trade as signs emerged that Greece’s debt crisis could be easing, while firmer copper prices after a massive earthquake in Chile boosted mining shares.

FUNDAMENTALS

* Up to one-fifth of Chile’s copper mine capacity was shut after the world’s biggest producer was hit by a powerful earthquake on Saturday, but at least two mines in the quake-affected area resumed operations within 48 hours.

* Chile’s biggest copper mines hit by a massive earthquake slowly resumed operations on Sunday despite limited power supplies, which analysts fear could curtail exports from the world’s No. 1 producer.

* Chinese copper mining stocks rallied on Monday as copper prices hit five-week highs on supply worries after a massive earthquake hit top producer Chile.

* Key zinc mining and smelter firms have agreed to processing fees of around $270 a tonne, up almost 40 percent on last year, industry sources said on the eve of the International Zinc Association (IZA) conference.

* Global miner Rio Tinto will increase its stake in Canada’s Ivanhoe Mines by 2.7 percent to 22.4 percent for $233 million, in a move tied to plans to jointly develop the giant Oyu Tolgoi copper mine in Mongolia.

TECHNICALS

* Copper support at $6 970, resistance at $7 240, 14-day RSI at 64.5.

* Aluminium support at $2 070, resistance at $2 142, 14-day RSI at 56.7

Taseko will receive the prevailing market copper price while it is within the price range. Should the market price be outside the price range, Taseko will receive a minimum of US$2.50 and a maximum of US$3.95 per pound for the hedged copper. Remaining production from Gibraltar is unhedged.

Taseko recently raised C$180 million by selling 25% of the Gibraltar mine to Sojitz Corp. of Japan. Capacity is being expanded to 30,000 t/d.

“These factors are expected to start a reversal of the upward trend in inventories over the coming months,” the company said in its financial results.

Grupo forecast that its Mining Division (which now includes U.S. copper miner Asarco) is expected to produce 720,000 tons of copper this year without including any production from Mexico’s Cananea copper mine, which remains closed because of a lengthy labor dispute.

Copper production for 2008 was 496,022 metric tons, a 1.5% increase over 2008 production. “This increase is the result of our strict operating focus and improved ore grades at La Caridad [in Mexico] and [Peru's] Toquepala mines,” the company said in its financial results release.

GMexico said, “The outlook for molybdenum is equally positive, and this metal will start trading on the London Metals Exchange in (LME) in February.”

The company reported a 14% increase in moly production last year for a total of 18,687 metric tons. Zinc production increased 3.3% in 2009 to 110,430 tons. The increase was due principally to improved ore grades at La Caridad and improved grade and recovery at Cuajone in Peru, according to Grupo.

Last year’s silver production increased 8.2% to 13.3 million ounces of silver while gold production was reported at 15,088 ounces, a slight increase over 2008.

ASARCO

Meanwhile, Grupo Mexico’s hard-fought reacquisition of U.S. copper miner Asarco will generate tax benefits of US$1.024 billion for Grupo, which will be realized beginning the second quarter of this year.

Asarco is the third largest copper producer in the U.S. and has reserves of 5 million tons of copper concentrate, representing 30 years of mine life, according to its parent.

“With the integration of Asarco, GMexico positions itself as the number one company in copper reserves worldwide,” the company claimed, “ahead of Codelco and Freeport, and reaffirms its position as one of the main producers of mined and refined copper.”

Asarco contributed 10,646 tons of copper, 122,068 ounces of silver and 24,405 tons of sulfuric acid as GMexico had only consolidated the Asarco operation for 22 days beginning December 10, 2009.

Grupo said it contributed $705 million in cash and secured financing of $1.5 billion to capitalize Asarco in the amount of $2.2 billion. Asarco contributed $1.357 billion from its own cash and made payment to its credits for an aggregate cash consideration of $3.562 billion.

In addition a one-year promissory note of $280 million was delivered to Asarco’s asbestos creditors.

CAPEX PROGRAM

On January 29th, Grupo’s board of directors also approved a $3.9 billion capex program for the next three years. Of that, $2.95 billion will be invested in the Mining Division, $576 million in the Transportation Division, and $384 million in the Infrastructure Division.

The board approved a $2.8 billion capex program for Southern Copper Corporation (SCC) including $1.8 billion to increase SCC’s annual copper production by 120,000 metric tons by the end of 2011 with the completion of the Peruvian Tia Maria project. The capex program will also expand the Toquepala mine in Peru, which will increase annual production by 100,000 metric tons of copper and 3,100 metric tons of moly by 2012. The Cuajone mine will be modernized and expanded to increase annual copper production by 72,000 metric tons of copper.

The board also voted to invest $1 billion in Mexico “if and when the company has been provided with the necessary labor and judicial conditions required for such an investment.”

The budget includes the expansion of production at the La Caridad mine by 50,000 metric tons of copper and 3,000 tons of moly annually. The program also includes the construction of a power plant “resulting in significant savings of approximately 50% of our current costs.”

The three-year investment program could include an additional $3.85 billion of investment in Mexico, which would be directed towards projects at the Cananea mine and the development of the Greenfield copper and gold deposit of El Arco in Baja California.

“These incremental investments would result in an additional 490,000 tons of copper production per year to the previously mentioned 342,000 tons,” the company said. “This investment is suspended until the company is provided with the labor conditions and the availability of competitive energy rates that are required to undertake these projects.”

The capex investments programmed for Asarco over the next three years are $150 million.

FINANCIALS

GMexico reported net consolidated earnings of $887 million or 11-cents per share for 2009, down $189 million or 17.6% from 2008 which reported net earnings of $1.076 billion or 14-cents/sh.

For the fourth-quarter 2009, Grupo reported net income of $342.05 million or 4-cents/sh, up 297.5% from a loss of $173.2 million or negative 2-cents/sh reported during the fourth quarter of 2008.

Avanco says it is highly encouraged with results to date which illustrate the feasibility of a low cost, minimum risk project with a strong economic performance.

The Scoping study on the Rio Verde High Grade Copper Project is nearing completion and illustrates ~5,000tpa of copper sales with ~US$57M total cash flow with ~$1.70 total cash costs for the opening six years under study.

The high grade strategy focuses on the JORC compliant 210,000t at 11.6%Cu resource, with pre-production Capex of ~US$2M.

Plant and infrastructures ~US$9M to be funded from early cash flows, while grade control drilling to increase and upgrade resources to measured and indicated categories to be completed during third quarter of 2010.

The very near term copper production from Rio Verde through exploitation of the high grade Inferred and Indicated JORC compliant resource at the Antas South deposit contains 1210,000t at 11.6%Cu.

The company hopes to increase copper output by seamless development of heap leaching following the commissioning of the high grade flotation plant.

Develop and bring on stream new copper metal production via proximal Rio Verde targets or advanced stage acquisitions.

The maiden JORC Resource Estimate for Antas South is 210,000t at 11.65% Cu, 8 Mt at 0.83% Cu (0.3%Cu cut) and 17.6 Mt at 0.48% Cu (0.1%Cu cut).

Flotation recoveries of 75% Cu have been demonstrated with performance expected to be improved through optimisation over the coming months.

In progressing the study Avanco has examined a number of production scenarios including the current proposal of scheduling production from early mining of “out-of pit” direct ship saleable ores. This approach minimises initial capital requirements and enables concurrent construction and commissioning of a flotation beneficiation plant within 24 months self funded from out-of-pit copper revenues.

The study has tested the first 6 years of the project and is based on a mine plan of 300,000t which reflects what the Company anticipates will be identified before mining begins.

Avanco is planning to use the Rio Verde High Grade Copper Project as a “Springboard” to become a very near copper producer in the Carajas.

The above intersections contain +25% copper which is believed to be associated with predominantly chalcosite mineralisation. By adopting a selective mining method, the Company believes that ~20,000t of ore at 25% Copper grade can be mined ‘out-of-pit’ and be direct shipped for sales.

The high grade zone is open along strike and the Company believes that additional high grade zones exist at Antas South and within neighbouring exploration targets. Avanco is aiming to discover additional high grade zones before production commences.

Avanco anticipates completing a program of grade control drilling in third quarter of 2010 to increase and upgrade resources to measured and indicated categories and move the high grade resource into a “ready-to-mine” status.

* Puts 2010 copper estimate at 500,000 tonnes

* Says to produce 18,500 tonnes of molybdenum this year

* Still no restart date for strike-hit Cananea

LIMA, Feb 2 – Southern Copper Corp, one of the world’s largest copper producers, said on Tuesday it sees average copper prices at $3.25 per pound in 2010, as it expects emerging and developed economies to boost demand of the metal.

Copper, which is used in construction, rose 140 percent in 2009 on strong Chinese buying and supply concerns, but fell 8.5 percent in January as rising inventories suggested demand outside China was weak.

U.S. copper futures <HGHO> settled up 0.2 percent on Tuesday at $3.0895 a lb in New York.

“We believe that inventories of copper will start to die off during the year, reversing the last month’s trend,” Southern Copper’s Chief Financial Officer Genaro Guerrero said on a conference call with investors.

He said he expected buying from emerging economies like China to support prices through this year, as well as rising consumption in developed countries like the United States.

Southern Copper <PCU.N> <SPC.LM> also gave guidance for its 2010 production on the call.

It put its copper production estimate for this year at 500,000 tonnes, slightly above the 485,376 tonnes it mined this year, and its molybdenum forecast at 18,500 tonnes, in line with last year’s output.

The company said it expected its zinc sales this year be around 110,000 tonnes and its silver sales to come in near 16 million ounces in 2010.

CANANEA RESTART

Southern Copper, a unit of Grupo Mexico <GMEXICOB.MX>, operates the giant Cananea mine in Mexico, which historically has produced some 20 percent of the company’s copper output and has been hit by a strike for the past two years.

The company made a fresh offer to unionized workers late last month, but the union said miners would not accept it.

When asked when Southern Copper might be able to restart operations at the mine, Guerrero said he had no estimate.

Coal is expected to account for 40 percent of core earnings this year while copper is due to make up 36 percent and zinc 10 percent, according to Morgan Stanley.

Xstrata, the world’s biggest exporter of ‘thermal’ coal used in power plants, said on Monday total coal production in 2009 rose to 95.2 million tonnes compared to 85.5 million tonnes in 2008 following the takeover of Prodeco in Colombia.

The average price of Australian thermal coal, which accounts for the bulk of production, fell to $80.30 per tonne from $95.60 in 2008, a statement said.

Mined copper output was 906,898 tonnes while zinc production rose 20 percent to 1.03 million tonnes.

Xstrata, the world’s largest zinc producer, did not provide an outlook on the coming year.

Zambia’s central bank, the Bank of Zambia (BoZ), said in a fortnightly report copper exports also rose to 612,021 tonnes between January and November 2009 compared with 517,674 tonnes in the corresponding period in 2008.

Cobalt production in the period under review rose to 5,464 tonnes from 4,324 tonnes and exports increased to 5,275 tonnes from 4,259 tonnes, the central bank said.

The situation will extend until 2012, said director general for coal, minerals and geothermal Bambang Setiawan on Wednesday.

Newmont will expand its operation at the Batu Hijau mine in West Nusa Tenggara, Indonesia’s second largest copper and gold mine.

“The expansion of the mine area will [temporarily] lower [Newmont’s] production,” Bambang said.

The government expects copper production to reach 1,016,949 tons this year, up from the estimated figure of 868,171 tons for 2009. But, the government estimates that total output will also drop to about 644,098 tons in 2011.

As for gold, the government expects production to reach 115,998 kilograms this year, up from the 2009 estimated figure of 105,404 kilograms. In 2011, it is estimated that gold production may fall to 91,171 kilograms.

PT NNT’s public relation manager Kasan Mulyono confirmed the contents of Bambang’s statement.

“Production will drop significantly in 2011 because the grade of the mined ore will be lower,” he said in a text message.

Rubi W. Purnomo, Newmont’s spokesman for operations in Indonesia, said that PT NNT actually would mine more tons of material in 2011. “However, copper and gold production will decrease in 2011, because the ore material has different characteristics from that mined in 2010,” he said.

As of September 2009, gold sales from the Batu Hijau mine were 381,000 ounces, up from 185,000 ounces in the same period in 2008. Consolidated copper sales reached 342 million pounds, up from 201 million pounds in the comparable period in 2008.

However, neither Kasan nor Rubi gave any further details on the reasons for the drop in output predicted for 2011.

Copper and gold are among the primary mineral commodities exported by Indonesia. Other commodities include tin, iron ore and nickel. In general, the production of these commodities is expected to increase this year.

“[Economic] growth in China and India is expected to be normal again this year. As the two countries are the major commodity consumers, their growth is expected to reenergize the commodities [market],” Bambang.

The price of gold for immediate delivery rose by as much as US$8.82, or 0.8 percent, to $1,126.82 an ounce and stood at $1,124.52 by 11.23 a.m. London time, Bloomberg reported. Meanwhile gold for delivery in February rose in price by 0.6 percent to $1,125.20 on the New York Mercantile Exchange’s Comex unit.

In their second assembly this week, the miners set 5:00 a.m. Monday as the starting time for a strike by the roughly 5,600 workers at Chuquicamata, the world’s second-largest copper mine, located some 1,500 kilometers (932 miles) north of Santiago.

Codelco, the globe’s No. 1 copper producer, told union leaders that because workers did not accept the proposed three-year contract by noon Thursday, the offered bonus was cut from 11.5 million pesos ($23,500) per worker to 6.5 million pesos.

The revised offer retains a 3.8 percent pay hike as well as no-interest loans worth around $6,000 to each employee.

In a statement issued Thursday, Codelco restated its willingness to continue talks aimed at reaching “a mutually advantageous accord.”

But the unions declared negotiations at an end after rejecting the latest offer from the company.

Union officials said the workers want a pay raise of 4.7 percent and a bonus comparable to the 14 million pesos ($28,000) each that BHP Billiton paid out earlier this year to secure labor peace at its La Escondida copper mine, the world’s largest.

Chuquicamata accounts for around 1.6 million tons in annual copper production, more than a third of Codelco’s total output, and a strike would cost the firm around $8 million a day.

This is the first time Codelco workers have voted to strike since 1996 and revealed fissures between union officials, which backed the company’s offer, and the rank and file.

Codelco posted pre-tax profit of $2.06 billion for the first nine months of this year, compared with $4.97 billion for all of 2008.

Most of the loan, about $2-billion, will fund the development of the Boschekul copper project in northern Kazakhstan, which could produce 12,5-million tons of copper ore annually.

The FTSE 100-listed miner said on Wednesday it would use $100 million to develop the Bozymchak gold/copper project. The remaining $600-million – available for signing over the next three years – would be allocated to other projects.

“Bozymchak will now move into development, with first output in 2011, and the feasibility study for our major copper growth project at Boschekul will start in early 2010,” said Chief Executive Oleg Novachuk.

“Securing this funding is a major boost for copper production from Kazakhstan and will help to meet the growing demand of our customers in China.”

China is the world’s top consumer of copper, a metal used widely in construction and power.

Shares in Kazakhmys were up 0,2% at 1313 pence at 1144 GMT, valuing Kazakhstan’s largest copper producer at about 7-billion pounds ($11,2-billion).

Kazakhmys said in October it was in talks with China Development Bank and Samruk regarding a major unsecured loan facility.

The figure represented a rise of 14% from 702 000 tonnes last year.

Kang said Jiangxi Copper’s smelting and refining facilities in Jiangxi province would resume full operations on Thursday after the repairs.

He added the current power supply tightness in Jiangxi province was not expected to cut the company’s production.

“The possibility of cutting power supply to us is little since we are a major company here.”

Jiangxi Copper has not yet decided whether it would run at full capacity to produce 900 000 t of refined copper next year, depending on supply of raw materials concentrate and scrap, Kang said.

The firm has a designed smelting capacity of 600 000 t a year using copper concentrate as feed. It also operates another 200 000 t of designed smelting capacity using scrap as feed in Guixi city.

The two smelting systems could run above designed capacity and reach a total of 900 000 t a year. It also has 900 000 t of annual refining capacity.

China, the world’s top copper consumer and the driver of a nearly 140 percent rise on London Metal Exchange copper prices this year, heavily relies on imports of concentrate and scrap for refined copper production.

Production from the mine – the world’s fourth largest copper deposit – may drop by up to 70 000 t before repairs to the main shaft are completed and full production resumes, the Australian Bureau of Agricultural and Resource Economics (ABARE) said.

Its estimate of losses from the mine is up to 40 percent higher that most analysts’ forecasts, and represents more than a third of total capacity of around 200 000 t/y.

Copper prices are already rising – up by around $1 000/t to $6 900/t since the start of October, and more than doubling so far this year – on concerns that global demand could outpace supply next year.

In its latest quarterly outlook, ABARE cut its forecast for refined copper exports by 15,8 percent for the year to June 30, 2010, and its estimate for refined copper output by 13 percent to 408 000 t.

“If realised, this will be the lowest refined copper production recorded in Australia since 1998-99,” it said.

Australia’s Macquarie Bank predicts a global copper supply deficit is looming this year that will take two years to correct, increasing its 2010/2011 copper price forecasts by two to three percent on Tuesday to $3,25/lb to $3,40/lb ($7 166/t to $7 500/t).

The bureau also revised up iron ore exports by two percent and coking coal exports by 16,2 percent, citing strong demand for raw materials by Asian steelmakers.

Chinese imports of coking and thermal coal and iron ore should remain strong into 2010, underpinning higher production from Australia mines as demand shows signs of picking up in other Australian export markets, according to the bureau.

The iron ore export trade is a high stakes business worth more than $80-billion a year.

It is dominated by Australians Rio Tinto and BHP, along with Brazil’s Vale, on the mining side, and China, the world’s biggest iron ore consumer, on the other.

“China will continue to have a significant influence over the demand for minerals and energy commodities in 2010, but consumption is also forecast to increase gradually in OECD economies,” the bureau said.

Organisation for Economic Co-operation and Development (OECD)-based consumers that drew on their own inventories as the global economic slowdown worsened, reinforcing the sharp weakening of underlying demand for industrial commodities, may soon be returning to the market to replenish stockpiles, according to the bureau.

“The rebuilding of stocks in 2010, if it occurs, will provide additional support for minerals and energy commodity demand,” it said.

In October, haulage equipment failed inside the main shaft of Olympic Dam, which transports 75 percent of the mine’s copper and uranium-bearing ore to the surface. It is under repair and is not expected to be fully operational until the first quarter of 2010, according to BHP Billiton.

Vedanta Resources will launch a copper treatment facility at its Zambia-based Konkola Copper Mine Nchanga unit to raise output.

The project involves the development of a granulated slag dump for treating copper concentrates from Nchanga, Konkola and other sources that are not operated directly by Konkola Copper Mine.

Under the smelting process, copper concentrate will be treated in an electric furnace with a flux.

The assessment report submitted to the Zambia Environmental Agency says the final products are matter and slag with the matter being further processed to generate copper anodes.

Project life is estimated at 20 years at an annual average slag production rate of 540,000t.

The Nchanga Mining Licence Area (LML34) comes under Konkola Copper Mine’s existing licence area.

Konkola Copper Mine aims to meet more than 50% of Zambia’s expected copper production by 2010 and meet rising demand from the global market.

Xstrata said it would close the Kidd metallurgical operations in Canada next May, though the mine and concentrator would continue to operate.

That suggests the mine’s concentrates, used to feed Kidd’s 125,000 tonnes a year of refined copper production, could be available to other smelters.

Treatment and refining charges (TC/RCs) are fees paid by overseas sellers to Chinese smelters for converting imported concentrates into refined copper, and are deducted from the sale prices, based on London Metal Exchange copper.

Higher TC/RCs arise when supply of concentrate rises or demand falls, which usually cuts the prices of concentrate and could in turn boost refined copper production.

‘The closure will certainly benefit smelters,’ an industry source said.

In October, Chinese smelter officials said top copper producers were seeking TC/RCs of $50 per tonne and 5 cents per pound, respectively, from foreign miners for concentrate shipments in 2010.

Chinese smelters now are looking to receive TC/RCs of around $60 and 6 cents, which will be still 20 percent lower than this year’s $75 and 7.5 cents.

Chinese smelters were worried about a fall in copper prices after prices more than doubled this year, a smelter official said.

‘Cash production costs at global smelters, including Chinese smelters, are over TC/RCs of $55 and 5 cents. We are trying not to make losses, or at least we don’t make big losses,’ he said.

Global miner BHP Billiton has offered TC/RCs of $43 and 4.3 cents to Chinese smelters for 2010. The two sides would hold the second round of the annual talk in the coming week, industry sources said.

Japanese smelters, the world’s second-largest copper concentrate buyer after Chinese, have also indicated their term TC/RC requirements around $60 and 6 cents to overseas miners. Last month, Japanese smelters expected the TC/RCs at $50 and 5 cents in 2010.

BHP has offered term TC/RCs of around $40 and 4 cents to Japanese smelters, the industry sources said.

A senior Japanese official directly involved with the term talks said there was still a price gap of about $20 between Japanese buyers and BHP.

‘There’s still a wide gap in our ideas…and I don’t anticipate an agreement when we meet next week,’ he said.

(Additional reporting by Miho Yoshikawa in TOKYO)

Copper prices fell steep in the final months of 2008 with the December spot price on the London Metal Exchange (LME) at $1.39, as compared with the 2008 peak of $3.94 which was hit in April. But in the first three months of 2009, the LME spot copper price has averaged $1.55.

Bloomberg News reports that LME metals jumped in price in March as some investors bought commodities in anticipation of a rebound in global economic growth. The exchange’s index of copper and five other industrial metals increased 11% in March, the most in 13 months. However, the International Copper Study Group recently announced that copper supply ended 2008 ahead of demand. Refined copper production rose by 3.4% on the year in 2008 to just over 14.7 million metric tons, the ICSG said in its latest report. Copper usage was up 1.9% in the same period to 13.9 million metric tons.

The head of research Nicholas Brook at London-based ETF Securities, who says that prices of copper “have probably found a floor” since several mining companies have cut activity in the past year due to lower prices and reduced access to financing. In a conference call reported by Reuters, Brooks predicts that copper prices in the short term will be underpinned by China, which has announced aggressive infrastructure spending.

However, the buying surge in China may not be here yet, as China’s economy grew by 6.1% in the first quarter, its slowest pace in 10 years. Premier Wen Jiabao says that while China’s economy is in better shape than other nations, “it is still some ways off from a full recovery.”

The commodities team at New York-based J.P. Morgan Securities has written to clients that “the undeniable reality for the copper market is that outside of China, demand remains moribund.” These analysts believe that a lasting recovery in copper’s price still is a long way off but are reluctant to pronounce a bottom because “even with projections of a modest improvement in western world demand in the second half, when stimulus efforts start to take effect, we believe that China’s growth will not be enough to offset the demand destruction seen in the western world.”

Still, the J.P. Morgan analysts do see copper averaging a slightly higher $1.67 in 2010, noting that strong gains are not likely for some time due to high inventories and fairly weak overall demand.