CO P P E R Hit and run

The 10% decline in the copper price since late December, from around US$2,90/lb to $2,53/lb this week, took the metal to fresh five-year lows and piled further pressure on the global diversified miners.

BHP Billiton, Rio Tinto, Glencore and Anglo American took a knock from last year’s falls in the prices of iron ore, coal and, for Billiton, crude oil.

Using London Stock Exchange share prices to exclude currency moves, Glencore has shed 12% in the past month and Anglo has dropped 3%. Billiton has gained 5,8% and Rio Tinto 2,4%. Over one year they are all between 10% and 20% lower.

Glencore is the world’s thirdbiggest miner of copper and the world’s largest supplier, with copper contributing about 45% of last year’s earnings before interest and tax.

Rio Tinto is the world’s sixthlargest producer of copper, which contributed 8% of its underlying earnings in its past financial year. Billiton’s copper assets delivered 21% of group underlying earnings before interest and tax last year while Anglo American earned a quarter of underlying earnings before interest, tax, depreciation and amortisation (Ebitda) from copper in its last full financial year. Anglo has put some of its Chilean copper assets up for sale and has confirmed it intends to exit the Michiquillay exploration project in Peru, leaving it to focus on its stakes in Collahuasi and Los Bronces.

Since the delisting of Palabora Mining last year, the JSE has no “pure” copper mining companies, though at a highenough price there could be interest in what remains in the old copper mines in the Northern Cape. Copper mining in sub-Saharan Africa is now concentrated in the Democratic Republic of Congo and Zambia. However, Zambia’s proposal to introduce a higher royalty tax on open-pit miners would constrain