Base metals future bright, analyst

The medium outlook for base metals is positive.

The medium to long term outlook of base metals is incredibly positive, Fat Prophets head of mining and resources research Gavin Wendt told MINING DAILY.

In recent months the price of copper has surged, rebounding from its low of $US1.29 a pound on Christmas Eve to $US2.15 a pound.

“Most base metals, specifically copper, have experienced strong gains lately and have opened themselves up to a bit of profit taking in the short term,” Wendt said.

Unlike other base metals, which have seen prices fall below the price of high-cost production, almost every copper mine in the world would be cash positive at today’s prices.

Not surprisingly, copper miners like Equinox Minerals and Anvil Mining have taken advantage of the recent change in sentiment to raise much-needed equity that had appeared less readily available ahead of the copper price rally.

“We are optimistic about the growth of all base metals simply because the world is growing,” Wendt said.

“Even though overseas infrastructure was put on hold for a while, housing and infrastructure in China and India is still going through the roof.

“The world is still growing and the world’s demand for base commodities will continue to increase.”

However, Wendt also said the resource stockpiles need to run down to zero before a significant recovery in prices can be seen.

“I believe it will take about 12 months before the stock piles run down to zero,” he said.

“We are looking at mid 2010 before we see a real recovery in the future of base metals.”

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