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Greece Debt Swap Progress Lifts Copper Demand
Fri, Mar 9, 2012 Copper Articles, Feature Articles
Post by Shihoko Goto, Copper Reporter By Shihoko Goto — Exclusive to Copper Investing News


Renewed hopes that Greece will get back on a path to financial stability, coupled with an improved outlook for the Japanese economy and weaker dollar, are lifting demand for copper. Still, an uptick in the latest US weekly unemployment claims and persisting longer-term concerns about Europe’s growth prospects continue to keep investors on their toes.

Market eyes are once again on Greece as the country is expected to go through with sovereign debt restructuring. Over three-quarters of bondholders are expected to be eligible for the debt swap, which would require banks, private funds, and other investors to accept a nearly 75 percent reduction in the value of their holdings in exchange for new bonds. The debt swap would cut about 100 billion euros of Greece’s public debt, and is essential for the country to qualify for its second 130 billion euro bailout program and avoid default.

“With the short term market perception towards the Greek debt swap agreement improving over the past 24 hours, confidence has improved and the risk-off activity seen over the past couple of days has abated,” stated Standard Bank in its daily commodities research note Thursday.

Adding to investor confidence is news of a stronger Japanese economy. The country’s fourth quarter GDP was revised down to a 0.7 percent contraction, less than its initial estimate of a 2.3 percent contraction.

A weaker greenback has also given a boost to base metals as the dollar’s dips make it cheaper for non-US investors to buy. However, a rise in US jobless claims by 8,000 to 362,000 in the week ended March 3 is above what most economists had expected, and puts a damper on those expecting the recent onslaught of strong US data to lead global demand.

Benchmark COMEX copper for May delivery was up 0.22 percent at $3.79 a pound on Thursday afternoon trading.Company news

The world’s third-largest copper mine, the Collahuasi mine in Chile, is expected to increase its output this year compared to what it was a year ago. Owned jointly by Anglo American (LSE:AAL) and Xstrata (LSE:XTA), the mine produces about three percent of the world’s total copper output, and produced 453,000 tonnes in 2011. Collahuasi is looking to increase its annual output to between 800,000 and 1,000,000 tonnes a year from 2017. The mine’s environmental impact study to outline its expansion plans will be ready by May.

Miners at Freeport-McMoRan‘s (NYSE:FCX) Indonesian Grasberg mine will be going back to work on March 12 after on-site violence halted operations about two weeks ago. Operations will gradually return to normal and the company should be able to recover lost output in four months, said Virgo Solossa, head of organizational affairs at PT Freeport Indonesia’s labor union.

Meanwhile, the Indonesian government said that it will prevent foreign companies from owning more than a 49 percent stake in some mines. Non-Indonesian mining license holders will need to reduce their shareholding to below 49 percent from the current 80 percent limit within the next decade.

Junior company news

Malbex Resources (TSXV:MBG) acquired two copper-gold projects in Argentina. Both the Quebrada Seca and Chalchalero projects can be explored year-round, even when the company’s flagship Del Carmen gold-silver project is inactive during the Andean winter months.

“Our team of experienced Argentinean geologists has been reviewing projects across Argentina for the past 16 months, and we are pleased that their work is now bearing fruit,” stated President and CEO Tim Warman. “The Del Carmen project remains our key project, but with only a seven month exploration season in the Andes, it is critical to Malbex’s future success to deliver a continuous stream of exploration results on a year-round basis. We intend to begin working on these projects and our new gold project in Peru shortly after the Del Carmen project winds down for the winter in late April.”

EurOmax Resources (TSXV:EOX) plans to drill aggressively at its KMC copper-gold project in Serbia.

“Previous drilling at KMC has already identified a robust copper-gold skarn system at Copper Canyon. Our new dataset clearly indicates the presence of at least seven additional large geophysical anomalies similar in nature to Copper Canyon. Some of these are associated with strong surface geochemical anomalism. Beginning in late April, we will undertake systematic drilling of these new targets that we believe could generate significant results at KMC,” stated company director Quinton Hennigh.



Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.