10% to be a cap on copper price rise in 2018
----Interview with Liu Yang
Board Director& Vice General Manager
Sino Pak Minerals (Pvt)., Ltd.
- Sino Pak Minerals (Pvt)., Ltd. is the only Chinese private enterprise that owns 100% mining right in Pakistan and has exported copper ore in addition to China's state-owned Metallurgical Corporation of China Ltd. Currently, more than 10 ore veins are found within the company's mining area.
- Asian Metal: Thank you for accepting the interview with Asian Metal. Would you please give us a brief introduction to your company?
- Sino Pak Minerals (Pvt)., Ltd. is the only Chinese private enterprise that owns 100% mining right in Pakistan and has exported copper ore in addition to China's state-owned Metallurgical Corporation of China Ltd. Currently, more than 10 ore veins are found within the company's mining area.
- Asian Metal: Under China's Belt and Road Initiative, many domestic enterprises choose to actively expand overseas market. As the world's biggest copper consumer, China has a relatively low self-sufficiency rate of copper concentrate and depends mostly on imports. What do you think are the main challenges and opportunities for Chinese enterprises when developing overseas copper resources?
- China is not rich in copper resources. The Belt and Road Initiative encourages Chinese state-owned and private enterprises to develop mining projects with foreign enterprises or obtain mining licenses for independent mining project. This creates huge opportunity for Chinese enterprises. Many domestic enterprises have technologies that are not inferior to those of foreign enterprises. Instead, it is the lack of experience in overseas projects and the lack of understanding in local political cultures that bring difficulties to overseas project investment. For example, in recent years, a few Chinese-owned private enterprises in Pakistan have cooperated with local Pakistani people who have exploration right but no mining right. As they are not familiar with the local laws and policies, the lack of mining rights makes it impossible for these Chinese enterprises to carry out large-scale mining activity, which caused tremendous loss. Besides, in regard to the background investigation and geological exploration of the mining area, domestic enterprises didn't invest enough energy and funds, and often purchased mining rights directly for the purpose of earning back investment as soon as possible. As a result, the long-term gains are not comparable to the return of investment of foreign companies.
- Asian Metal: Would you please give a brief introduction to your company's copper resource development?
- Our copper mine is located in the southwest region of Pakistan that holds the world's fifth largest copper ore reserves. The land that has been mined only detected one vein. No large-scope mining activity has been carried out yet and the current mining depth is less than 15 meters with Cu grade up to nearly 50%. Chinese geologists have already conducted prospecting work in the region where more than 10 veins are founded. The surface veins are several hundred meters in length and 2-3m in width, with estimated copper reserves of nearly 2 million metal tons. We hope to work with more professional teams for the development of copper resources.
- Asian Metal: The year 2018 has seen longer negotiation time for long-term treatment charge (TC) of copper concentrate, as miners and smelters mainly have dispute over the relationship of demand and supply this year. The long-term TC finally stood at USD82.25/t, which declined obviously compared with USD92.5/t in 2017 and was also the lowest level over the recent five years. This reflected an expectation of a still relatively tight supply in copper concentrate market in 2018. What's your opinion on the relationship between demand and supply in the copper market in 2018?
- Copper resource is declining, while we see increasing demand for copper globally. It is expected that copper price should rise in the second half of 2018, but futures price may fluctuate slightly affected by market operation made by professional fund managers. TCs for copper concentrate would sit at USD80-90/t in Q3 2018.
- Asian Metal: What do you think are the advantages that make your products more competitive in the international market?
- We are eliminating old mining equipment and plan to build copper beneficiation plants. Up on completion of the equipment, our product value will increase and a significant amount of transport cost will be saved. Therefore, both buyers and sellers will see increased revenue and enhance quality control.
- Asian Metal: As a bulk commodity with financial attribute, copper is largely affected by factors including policy changes at home and abroad as well as economic growth and usually experiences relatively drastic fluctuations of price. When in trading business, how can mining enterprises manage to control risk and gain profit?
- We are granted with mining rights, so we are not as badly affected as those trading-only enterprises by copper price fluctuation. Enterprises wish to see stable price, but a higher price will also lead to higher profit-level. In face of declining price, enterprises need to control risk. For example, enterprises can establish their own transport fleet in order to reduce transportation costs, and at the same time, take precautions to prevent copper concentrate powder from being stolen.
- Asian Metal: In 2017, copper price experienced a sharp increase of nearly 31%. What do you think the copper price trend will be like in 2018?
- I believe copper price wouldn't increase much in 2018, about 10% at most compared with those of 2017. But we must also pay attention to the price fall caused by the short-selling in the futures market when price reaches high levels.
- Asian Metal: In what ways do you think can Chinese enterprises improve their trading business as well as make a contribution to China's supply-side structural reform and the opening-up policy?
- To strength cooperation with excellent enterprises from across the world and set up a global business network in order to promote free trade and provide high-quality products and services for consumers worldwide.
- Asian Metal: Thank you again for sharing your views on copper market and wish you company a prosperous future!
