Fawzi Hanano at Goldman sees global copper production edging up just 1% this year, which will provide roughly 19 million tons of the key industrial metal (NYSEARCA:JJC) — often considered a proxy for construction and manufacturing activity — to the world’s factories.
The ongoing strike at Freeport McMoRan’s (NYSE:FCX) Grasberg mine in Indonesia is not helping.
FCX expects the strike to cut 45,000 tons of production out of its annual output, trimming its overall sales by about 2.5%.
Other key producers like Xstrata (PINK:XSRAY) and BHP Billiton (NYSE:BHP) are also reporting significant production shortfalls — XSRAY by 4% and BHP by a staggering 24% — as high-grade ore is mined out and lower-quality deposits take time to develop.
Hanano now likes First Quantum (PINK:FQVLF) for its high-grade projects in Central Africa, saying that unlike the major producers the company should be able to boost production 20% a year in the near future.
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