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HomeAfricaNamibia copper miner threatened by slump in prices

Namibia copper miner threatened by slump in prices

Weatherly International’s Namibian copper operation is battling to stay afloat, amid a slump in the international prices of copper and the expiry of the copper miner’s hedging arrangements with international copper buyers.

A senior manager at Weatherly International’s Tsumeb Copper and Customs Smelter Smelter in Namibia said that the company’s hedging agreement would expire in two months time and, coupled with the recent slump in the prices of copper, rings problems for the now struggling miner.

Weartherly Namibia MD Hans Nolte told PANA Thursday that from January, the copper miner would be exposed to the vagaries of the international market.

Nolte said that as from next year Weatherly would be exposed to normal copper prices on the international market.

Weatherly International, which is listed on the London Stock Exchange, owns Namibia’s largest copper mining and smelting operations.

The company had hedging arrangements, with copper prices locked in at US$5,000 per tonne.

Unfortunately, that contract will end on 10 January 2009, at a time when copper prices have fallen by nearly 50 percent below record highs of around US$8,940 per tonne in July.

Copper is used in power and construction.

China, the world’s largest consumer of copper, expects copper prices to remain relatively weak for the coming year.

Analysts said that China’s economic growth might account for about 60 percent of future copper output.

However, the financial crisis was reducing overseas demand for Chinese products which contain copper.

Volatility of copper prices has also cut domestic demand in China, with sharp price fall in copper this month spurring clients to cancel a few thousands tonnes of semi-finished products so far.

“Two months from now, we will be exposed to the normal copper prices—that is the problem we are facing and we have just that time to come up with programmes which will make sure that all our operations remain profitable at the lower copper prices,” Nolte said.

He said that the company was still on course to produce 12,500 tonnes of copper by the end of its financial year.

Nolte also said that flooded Kombat Mine, which was closed early this year because of rising overheads, would remain shut until the company’s balance sheet improves.

Weatherly produced 3,787 tonnes of blister copper during the second quarter of 2008 and 11,000 tonnes in the nine months to September, down from 22,700 tonnes during the corresponding period last year.

This is the lowest copper output since 2005.

Weatherly, which has copper interests in Zambia, acquired the former Ongopolo copper mines in 2006 and has five operating mines in Namibia.

Copper prices fell on the London Metal Exchange to a new three-year official low of US$3,708 per tonne early this week.

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