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copperbullion
Penny Pincher Member
Australia
136 Posts |
 Posted - 04/24/2008 : 03:24:16
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Tuesday, 22 April 2008 - Melbourne Australia
By Al Robinson
It's simple. Two out of every five tonnes of copper come from Chile. In Chile's banner mining district, as much as 75% of the country's power comes from hydroelectricity. When that water stops running…40% of the world's copper production is suddenly at risk.
Copper prices have added around 30% since January 1st. China's responsible for most of that. In a flurry of importing, China has driven international copper prices to US$4 per pound.
But on the supply side, things are looking grim. Chile's feeling the heat. It's in its worst drought ever, as a result El Nino phenomenon. The Chilean river system usually gushes forth with awesome force. Awesome force equals energy generation, in today's world of expensive fossil fuels.
To a Chilean miner, the scene below says "cheap electricity".
But as the water evaporates, so does copper production.
This energy shortage is coinciding with mining strikes in the copper capital. State-owned Codelco has closed down three mines, courtesy of new demands from contractors. Apparently the working class got wind of the fact that their labour is worth millions to mining corporations. The uprising begins.
Last year, a month and a half of striking cost Codelco big. US$100 million, to be precise.
So what do you get when you mix huge importing demand…energy crisis…and unruly mobs? We'd be willing to wager a tight copper market. The longer this lasts, the more ambitious copper prices will get…and the more ambitious copper traders will become.
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TenBears
1000+ Penny Miser Member
USA
1021 Posts |
Posted - 04/24/2008 : 08:47:58
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| Well then, the lifting of the melt ban needs to coincide with a Chilean drought. |
"Rich," the Old Man said dreamily, "is not baying after what you can't have. Rich is having the time to do what you want to do. Rich is a little whiskey to drink and some food to eat and a roof over your head and a fish pole and a boat and a gun and a dollar for a box of shells. Rich is not owing any money to anybody, and not spending what you haven't got." Robert Ruark
there are too wild Indians...
there are too wild Indians...
there are too wild Indians...-----still taunted
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 04/24/2008 : 13:30:44
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quote:
Originally posted by texcattlerancher
Well then, the lifting of the melt ban needs to coincide with a Chilean drought.
Melting U.S. pennies will have little to no impact on copper prices. To small a source.
if you melted every copper penny produced from 1959-1981 all at once. It would be 9 days of worldwide supply. If it is spread out over any time period at all, then it wouldn't be enough to matter.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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silverhalide
Penny Sorter Member
92 Posts |
Posted - 04/24/2008 : 17:01:58
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That is why I like the copper equities at this particular time. The power shortages and labor strife in Chile coupled with the credit crisis slowing down project pipeline for the smaller players. So far he demand is still there and the potential supply from the DRC looks iffy.
The ferrochrome market where about 75% of the world's supply is currently constrained for the same reasons is another market that should yield even larger dividends for pure play equities over the short and mid term. |
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Why Chilean Drought Means Surging Copper Prices
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