Copper

General update from Anglo American

Anglo American is today increasing its copper production guidance from its operations in Chile for 2018 and the following three years, as follows:

2018: ~660,000 tonnes (from 630,000 – 660,000 tonnes previously)

2019: 630,000 – 660,000 tonnes (from 600,000 – 660,000 tonnes previously)

2020: 620,000 – 680,000 tonnes (from 600,000 – 660,000 tonnes previously)

2021: 590,000 – 650,000 (new guidance)

Unit cost guidance for 2018 is lowered to ~140 c/lb (from ~145 c/lb previously) and 2019 guidance is 135 – 140 c/lb (new guidance).

Anglo American expects to add the first production from its Quellaveco mine in Peru in 2022. Quellaveco will produce 300,000 tonnes of copper equivalent per year, at a highly competitive first quartile cash cost of $1.05 per pound of copper, both on average over the mine’s first ten years. With a current Reserve Life of 30 years, Quellaveco provides significant expansion potential which, in combination with other organic growth opportunities, puts Anglo American on track towards producing more than one million tonnes of copper per year in the medium term.

LME data

Here is the copper price.

Calculation

Using a conversion of 1 tonne = 2204.62 llb

Using the conversion above means that the open market price is ~ $2.85 per llb for comparison purpose.

This means that the copper markup factor is ~ 2x  ($2.85 / $1.45).

Conclusion

This is satisfactory with respect to Anglo American copper production.


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