Dec 1 (Reuters) - BHP Billiton plans to lower production costs and increase output at its copper business, remaining optimistic about rising demand in the long term, the company’s president of copper said on Tuesday.
Daniel Malchuk said BHP would lower production costs to $1.08 per pound in its 2017 financial year, from a projected $1.21 per pound in the year ending June 2016.
“Over this period, the release of latent capacity across the portfolio will also help annual group copper production grow to approximately 1.7 million tonnes at very low cost,” Malchuk said in a presentation.
BHP has said it expects to produce 1.5 million tonnes in the 2016 financial year, down from 1.7 million tonnes in 2015.
Malchuk said while near-term oversupply in the copper market was weighing on spot prices, attractive long-term fundamentals supported the company’s positive outlook.
He said grade declines, falling investment across the sector, the lack of greenfield projects and expected demand growth in China were likely to constrain industry supply in the long term.
“At some point in time the copper market will need additional production and probably that is going to happen later in this decade or early in the next decade,” Malchuk told reporters on a conference call, adding BHP was not “too fascinated by the spot copper price”.
Copper prices slumped 10 percent in November, the biggest monthly loss since January, and have fallen nearly 27 percent so far this year.
“If you look at our copper portfolio, these are assets that will be operating for decades. So the value of our assets is not dependent on what happens today or in six months time. It is dependent on what is going to happen in the next 10 or 20 years,” Malchuk said. (Reporting by Olivia Kumwenda-Mtambo; Editing by Jason Neely and Mark Potter)