Halifax, Nova Scotia (PRWEB) March 24, 2015
According to SNL Metals & Mining, the average spot price of copper averaged only US$5,700/t in February, under 260c/lb, but remains comfortably above SNL's prediction of this year's average mined cost of 168c/b, calculated on a co-product basis. This compares with an average total cash cost of 171c/lb in 2014 and 180c/lb in 2013. The copper price averaged 334c/lb in 2013 and 311c/lb in 2014.
On a by-product basis, ie the "normal costing" method, where revenue from secondary products is netted off the cost of producing copper, the industry's average cost this year is expected to be 126c/lb, compared with 129c/lb in 2014.
Mining costs have risen recently but there have been offsetting credits from by-product metals. Royalty charges have also steadily increased over the past decade; partly as a result of increased metal prices but also due to rising government royalty rates.
Analysis by SNL's Associate Director Charles Cooper highlights the current mine capacity vulnerable to closure following the decline in copper price over the past 12 months (2015E Copper Supply Cost Curve chart) and the evolution of copper total cash costs since 1991. SNL’s analysis of the cost:price relationship concludes that during cyclical low points in metal prices, the copper price has fallen to at least the 9th decile of high cost producers, which indicates that the copper price would need to fall further before significant capacity became vulnerable to closure.
Note to Editors:
SNL's Mine Economics platform models over 500 mines producing copper, iron ore, lead, nickel, molybdenum, uranium and zinc. The platinum group metals are to be added shortly, with gold, manganese and silver mines to be incorporated later this year. The coverage already exceeds 75% of global production for each metal.
Production data includes ore and waste mined, head grades, metal recovery, and concentrate and intermediary products.
Cost data includes mine site cash costs, milling and processing costs, by-product credits, royalties and production taxes. These costs can be analysed on the basis of by-products ("normal costing", where revenue from secondary products is netted off the cost of producing the primary metal) or co-products ("pro-rata costing", where costs are shared between all metals on a net revenue basis).
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