By Leia Michele Toovey – Exclusive to Copper Investing News

On Tuesday, liquidation pushed copper to a six- month low to below $3.40 per lb in the New York Futures COMEX division trade. The end of market announcement of the Federal Reserve decision to keep interest rates steady at 2 per cent helped copper gain some.

But analysts do not expect a major upswing in copper prices since considerable demand worries still weigh heavy on the market. Copper’s prices are largely controlled by two primary consumers, China and the United States. There is considerable speculation that neither of the two are performing up to expectations. Calculations on current Chinese consumption indicate that it is about 4.8 per cent, well below the 10 per cent forecast. Consumption measures domestic production plus imports, but does not take into account restocking or destocking. If China is currently destocking by drawing on its reserves, this number would be artificially low, and the true consumption could actually be right on track.

Also hitting the American economic news headlines this week was the Fed’s announcement that US inflation had seen its second highest monthly jump since 2008, and that the US growth outlook remains highly uncertain. As a result, a great deal of volatility is likely to enter the copper market.

Going deeper

The world’s deepest copper mine is going even deeper.  Xstrata’s Kidd underground mine in Ontario is being excavated further and will hit a depth of 9500 feet from the existing 9100.  This will require a $121 million investment, and the process will be completed by mid-2010.  The expansion will enable Xstrata to extend the life of the mine by one year. Xstrata is on track at the development of their El Morro Copper Project in Chile.  It will decide by the end of the year whether or not to submit an environmental impact study.  In its half yearly report, Xstrata indicated that it had completed a final feasibility study-and that the project was potentially viable with acceptable technical and commercial risk parameters.

El Morro has a measured and indicated reserve of 489 million tonnes of 0.59 per cent copper. The project is a joint venture between Xstrata, who owns 70 per cent, and Metallica Resources Ltd, owners of the remaining 30 per cent. In its half yearly report, Xstrata also mentioned that its expansion plans at the Collahusi copper mine, Lomas Bayas mine, and Altonorte smelter were on track.

Frontera Copper now looks to tungsten

Frontera Copper has found a bonus to add to their copper production- tungsten. A preliminary resource estimate shows that their East Dodger and Invincible mines host 2,510,000 tonnes of tungsten, grading 0.379 per cent WO3. With the addition of the Emerald Mine remnant material, and East Emerald tungsten zone, the total tungsten resource is expected to improve dramatically.

Frontera Copper is a Canadian mining, development and exploration company whose principal activity is the production of copper cathode from the Piedras Verdes run-of-mine heap-leach copper operation in Sonora, Mexico. Based on the January 1, 2008, ore reserves and the estimated recoverable copper contained on the leach pads at December 31, 2007, approximately 1 billion pounds of copper is projected to be produced over the remaining life of the operation.

Codelco plans to buy two more copper properties

The world’s largest copper producer  Codelco announced earlier this week that it planned on buying two smaller copper properties from the state-run Enami.  The properties known as Casualidad and Virgo hold more than 400 million tonnes of minerals containing copper, iron and gold.

Plagued by strikes over the past year, Codelco also slashed its output expectation for 2008. This is the fourth year in a row that Codelco’s output has dropped, with strikes and dropping ore quality, extending losses.  Labour unrest has plagued many mining companies this year, including Southern Copper.  Southern Copper’s share performance has been hindered by strikes at many of their Latin American Mines.  Southern’s 52 week high was $47.75 per share, and their low was $23.35. Shares are slowly climbing back, with current value set at $26.25.

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