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View Full Version : BHP & Xtsrata Copper output plunges... good for Australia's juniors


Sparty
11-06-2011, 04:14 AM
The snippet below was taken from a Bloomberg story published today. (http://www.bloomberg.com/news/2011-11-03/xstrata-says-2011-copper-output-growth-will-be-lowest-since-2002.html) To me it points to a rather interesting investment scenario for Australia's emerging copper producers.


The emerging producers include some very tasty juniors that are going to begin mining in 2012.


Tasty? Yes because they either have very large resources and micro market caps or are extremely rich in co-credits.
(http://www.bloomberg.com/apps/quote?ticker=XTA:LN)

(http://www.bloomberg.com/apps/quote?ticker=XTA:LN)
Snippett
Xstrata Plc (XTA) (http://www.bloomberg.com/apps/quote?ticker=XTA:LN), a producer of metals and coal from Europe (http://topics.bloomberg.com/europe/) to Australia (http://topics.bloomberg.com/australia/), said growth in mined copper output this year will be the lowest since 2002 as declining ore grades, bad weather and strikes restrict volumes.


Production will rise by an estimated 40,000 metric tons, about 1 million tons less than planned and the smallest gain since 2002, when output shrank by 207,000 tons, Chief Executive Officer Mick Davis said today in presentation slides. ?Despite 10 years of investment, the supply side is still struggling to keep pace,? he said.
This year?s global copper deficit, estimated by Goldman Sachs Group Inc. to be the biggest since 2004, has resulted from a lower concentrate of metal in ore, storms in Australia and Latin America and industrial action at mines in Chile. Most of the copper producers missed output targets in the third quarter, Goldman Sachs said in an Oct. 27 report.



Xstrata?s copper output fell to 223,606 tons in the quarter from 233,647 tons a year earlier, while production at BHP Billiton Ltd. (BHP) (http://www.bloomberg.com/apps/quote?ticker=BHP:AU) dropped 24 percent, in part because of lower grades and strikes at the Escondida project.



So all in all a great time for new copper producers seems to be coming on-board.

The image below compares EV/Resources for our ASX copper plays.
http://www.australian-shares.com/assets/images/aoh-et-al.gif


AS can readily be seen AOH looks like it is very attractive and I suggest readers have a good hard look at their latest ASX report. I'd laso suggest that HGO is worthy of research. I have run the figures for Cudeco and they are now somewhere between HGO and DML. CDU is difficult as they are finding new deposits and have a very interesting mix of metals including some of the world's richest tellurium resources.


I hold several of the above.