Copper plant ‘ has future’

G L E N C O R E ’ S T o w n s v i l l e copper refinery has a future despite falling commodity prices and rising power costs.

The refinery was put in the spotlight last year, when Glencore threatened to shut its doors because of high power, labour, freight and rails costs.

This year, falling copper prices have created an issue for refineries worldwide.

On July 12, the copper price was sitting at $ US2.779 a pound. It has been higher than $ US3 a pound this year.

Fat Prophets commodity analyst David Lennox said the commodity’s price was under “considerable pressure”.

“With the recent tariff news in regards to the US, China and other parts of the world, we’ve seen that copper price unfortunately pull back quite significantly,” he said.

“What that means is operations have to deal with a lower copper price, which would suggest their margins will come in considerably from now on.”

Mr Lennox said Glencore would be looking at its Townsville refinery as margins started to shrink.

“When you see changes that significant, I would suspect that Glencore will probably be looking very closely at its cost structure up there and either trying to reduce them, or ultimately if they can’t and margins deteriorate further, they will look to reposition the plant elsewhere and take their production to other parts of the world.”

Despite the current poor copper market, Mr Lennox said the refinery had a future as it had been through low prices like this before.

“From that perspective, un- less we see a major collapse in the copper price, … at least it is operating on a positive margin.

“We think as long as the company can see positive cash flow coming out of the operations up there, it would stay pretty much safe in terms of ongoing operations,” Mr Lennox said.