BHP sees major copper demand boost from China's widening belt and road

By Kitco News / October 03, 2018 / www.kitco.com / Article Link


* Number of countries, regions rises to 115
* BHP to work with venture partners, organic growth
* Long term demand stronger than short-term trade tensions


By Barbara Lewis


LONDON, Oct 4 (Reuters) - China's overseas expansion willspread over land that is home to more than half the world'spopulation, potentially boosting copper use by 1.6 milliontonnes, or roughly 7 percent of annual demand, major miner BHPsaid on Thursday.


BHP has analysed the impact of China's Belt and RoadInitiative (BRI), a network of overseas construction projects,on commodity demand on the basis of a database it constantlyupdates.


It said China's overseas expansion plan covered 115 partnersacross Eurasia, parts of Africa, Latin American and Oceania, upfrom 68 countries or regions it cited in a previous blog post inSeptember last year.


Its latest analysis estimated the BRI represented one thirdof the global economy and would drive spending of up to $1.3trillion over the decade to 2023.


Vicky Binns, BHP's vice president for minerals marketing,told Reuters if anything the expectation an extra 1.6 milliontonnes of refined copper would be needed over the same timeperiod was conservative.


More than 70 percent of that demand is from 100 powerprojects, which typically are not the biggest source of copperconsumption - accounting for between 13 and 22 percent of allcopper use depending on the region.


Such initial investment could lead to knock-on demand fromother sectors.


"Increasing the international competitiveness ofmanufacturing in these regions may create a major lift in futuredemand from copper intensive sectors, such as automobiles,consumer durables and machinery," BHP says.


Binns downplayed the impact of mounting trade tensionsbetween the United States and China on demand, saying long-termfundamentals were likely to be robust.


China is expected to be a major beneficiary of increaseddemand because of its massive copper smelting capacity, butBinns said BHP was also well-placed because it can develop itsown capacity and work with junior players.


The major has said the commodities in which it seeks toexpand are copper and oil and in September it bought a 6.1percent stake in SolGold to get access to a promisingcopper-gold project in Ecuador. BHP, which operates the world's largest copper mineEscondida in Chile, said in its 2018 report it derived 28percent of its underlying earnings before interest, tax,depreciation and amortisation from copper.


Its ranking varies from year to year, but said the latestfigures make it the third largest copper company behind Chile'sCodelco and U.S.-based Freeport McMoRan .
(Reporting by Barbara Lewis; editing by David Evans)

Reuters Messaging:barbara.hm.lewis.thomsonreuters.com@reuters.net)) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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