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ICSG 1 Feb 09 - Based on existing facilities and announced project developments, annual mine production capacity in the period 2009-2013 is expected to grow at an average rate of around 4.3% per year (%/yr) to reach 23.1 Mt in 2013, an increase of around 3.6 Mt (19%) from that in 2009. Of the total increase, copper in concentrate capacity is expected to increase by 2.7Mt (4.3%/yr) to reach 17.9 Mt and solvent extraction-electrowinning (SX-EW) production by 820,000t (4.4%/yr) to reach 5.2 Mt. Most of the new mine projects and expansions are located in Brazil, Chile, Congo, Mongolia, Peru, the United States and Zambia, which together account for around 2.6 Mt (73%) of the projected mine capacity increase during this period. Annual smelter capacity is projected to grow by an average of 2.6%/yr to reach 20.2 Mt in 2013, an increase of 2 Mt (11%) from that in 2009. Asia will be the leading contributor to growth (1.8 Mt), with expansions and new projects expected mostly in China, but also in India, Indonesia and Iran. Africa is the second leading contributor owing to developments in Zambia. North American smelting capacity will fall by 12% (250kt) due to closures of plants in Canada. The ICSG tabulations indicate that world refinery capacity will reach 26.6 Mt in 2013, an increase of 3.2 Mt (13%) from that in 2009. About 2.3 Mt of the expansion is expected to come from electrolytic refineries and 820,000t from electrowinning capacity. Electrolytic refinery capacity growth is projected to average 3.1%/yr, exceeding the projected growth in smelter capacity, and electrowinning capacity growth (at the refinery level) is expected to average 4.3%/yr. About one half (1.5 Mt) of the world refinery capacity increase during this period is expected to come from electrolytic refineries in China; about 25% (830,000 t) from electrolytic capacity increases in India, Indonesia and Iran; and about 20% (600,000 t) from electrowinning capacity increases in Congo, Peru and Zambia.

US speciality brass mill Ansonia Copper and Brass Inc. has announced that it will lay off 85 of the 102 employees at its Liberty Street, Ansonia, factory in Connecticut. The plant manufactures copper alloy rod and wires. Company President Raymond McGee said "it's a very, very difficult situation". He blamed the redundancies, on top of 76 employees laid off in April 2007, on the company's struggle with escalating costs. Since 2002 electricity costs have soared 239%, natural gas 200%, fuel oil 125%, and copper and nickel 500% apiece. Ansonia's other facility in Waterbury, CT, which manufacturers copper alloy tube is unaffected by the announcement.

Further evidence of the impact of the North American economic slowdown on copper demand has recently been published by the ABMS and government statistical bodies. North American copper wirerod production plummeted 9.6% year-on-year to 174,000 tonnes in April. Output had been on a downward trend but the magnitude of the deterioration in April has still come as something of a surprise. A year-on-year increase of 2.0% in North American output January had been followed a 1.0% fall in February and a 2.7% drop in March. In April Canadian output was flat year-on-year due to improving export sales to the US, while US production fell 9.8% year-on-year and Mexican shipments slumped by 17.5%. On a year-to-date basis North American wirerod production was 2.9% lower in the four months to April 2008. Weakening demand from the automotive industry, coupled with a resurgance in copper prices and the return of Russian wirerod imports has clearly led to a deteriorating market situation for domestic mills.

Mueller Industries second quarter results highlight the tough times that the US brass mill industry is facing, but that companies can still operate profitably in a challenging market environment. The company's plumbing and refrigeration segment saw sales fall 11% to US$404m, while its operating profits dropped 32% to US$35m. The company blamed lower shipment volumes and lower spreads for the weaker performance. Sales at the company's OEM division, which includes its brass rod activities, rose 10% year-on-year to US$354m, while its operating profits rose 5% to US$19m. The improvement here is due to acquisition of Extruded Metals. Commenting on the results Harvey Karp, Chairman of Mueller Industries said "Mueller's earnings for the first half of 2008 were achieved despite the continuing decline in the housing industry, the sub-prime mortgage meltdown, the turbulence in the financial markets, rising metal costs, sky-high energy prices and a slowing national economy. Considering these adverse circumstances, we are pleased with the results."

Xinxing Zhunguan, a Zhejiang-based manufacturer of copper wirerod, plans to increase production at its facility to 165,000t in 2013, up by 10% from 150,000t in 2012. Despite low profitability at Chinese wirerod producers, an official at the company said Xinxing Zhunguan still plans to increase output in 2013 in order to enhance competitiveness. The company said it expects orders to be subdued in the run up to the Chinese Lunar New Year, but then expects a strong rebound after the holiday period. This is consistent with another report on 11th January from Reuters which cited several Chinese copper traders as expecting the period between now and the holiday to be quiet, followed by a strong rebound.

According to an official from Chinalco Kunming Copper Co., the Chinese wirerod manufacturer, the company produced 10,000t of copper wirerod in March, up from 7,000t in February. The official said that March's output of wirerod had risen because of a week-long shutdown in February for the Chinese New Year. However, output had still fallen short of the company's 13,000t target. Chinalco Kunming plans to produce 150,000t of wirerod in 2013, utilising around 68% of its 220,000t/y capacity. According to a report from Asian Metal, the company has recently settled its long-term charges for processing 8.0mm wirerod at RMB1,150/t (US$183/t).

Wirerod production at Hebei Dawufeng Copper has been temporarily suspended since early April in order to carry out maintenance. The company elected to halt production for a month in order to carry out equipment maintenance, owing to the currently sluggish wirerod market. Production at the plant, which has a wirerod production capacity of 100,000 t/y is scheduled to re-start in early May.

June 2008\nNA Copper Mail

Norddeutsche Affinerie AG (NA) said it is expecting at least EUR40 million of synergies each year from the takeover of Cumerio which was completed in March this year. The company said that it will benefit from the transfer of best practice between the two companies while cost savings mainly come from logistics and process optimization. NA also plans to increase production at its Cumerio smelters. The company expects further acquisition opportunities in Europe and in other parts of the world, including Asia. NA plans to expand its operations in southeastern Europe and the Black Sea region to capitalize on its strong economic growth before looking for growth opportunities outside Europe. In Bulgaria, the company currently expands copper cathode production capacity of its Pirdop smelter to 180,000 tonnes per year.

Norddeutsche Affinerie is to invest €62.5M to increase by 60% its copper scrap recycling capacity in Lünen, Germany by 2011. The investment will double the firm's capacity to process complex copper-bearing scrap such as shreddings, powders and electrical scrap to 140,000t/y, bringing total scrap recycling capacity up to 350,000t/y from 220,000t/y currently. The scrap will be processed into copper cathode. The investment will see the installation of a second smelting furnace, and a waste gas purification plant in Lünen. Norddeutsche's current secondary smelter in Lünen uses a range of scrap, whilst its Hamburg plant uses copper concentrate and a small percentage of high-grade scrap. Electronic scrap availability has increased in Europe as end-of-life regulations have been introduced for its disposal.

According to data released by the Shanghai-based nonferrous metals data provider Metalease, 18 major copper tube makers in China were operating at 35% capacity in January, in response to plummeting demand. Business activity has also been affected by the Chinese New Year festivities. The plants, which have a combined capacity of 978,000 t per year, consumed 28,000 t of refined copper in January compared to their consumption capacity of 81,500 t per month. Even though the Chinese government has increased the export tax rebate for copper tubes of diameter of less than 25 mm, the 18 copper tube producers exported only 21% of their total output in January, compared with 26% in December.

According to the China Nonferrous Industry Association (CNIA), China's copper fabricating capacity will increase from 12Mt/y today to 16Mt/y in 2015. In 2010, China's fabricating capacity was 12Mt and output was 10Mt. By 2015, CNIA forecasts an additional copper fabricating capacity of 1.5Mt of copper wire, 1.2Mt of copper plate and 450,000t of copper tube.

LDK Solar (NYSE: LDK) said Monday it expects to generate between $2.8 billion and $3 billion in revenue and ship between 1.45 gigawatts and 1.55 gigawatts of silicon wafers in 2009. The Chinese company also said its wafer manufacturing plant has reached 1 gigawatt of annual capacity. It's a noteworthy milestone on the way to production capacity targets of 1.2 gigawatts by the end of the year, 2.2 gigawatts by the end of 2009 and 3.2 gigawatts by 2010 that the company announced earlier this month. LDK shares rose more than 8 percent to reach $49.63 per share in recent trading. The wafer maker's stock has climbed since it posted blockbuster second-quarter earnings on Aug. 11. LDK's net income grew more than fivefold year-over-year to reach $149.5 million, or $1.29 per share. Second-quarter sales more than quadrupled to $441.7 million from $99.1 million from the year-ago period (see LDK 2Q Profit Triples, Margin Falls). Strong demand for its wafers has prompted the company to expand its production capacity quickly. LDK also plans to start making it own polysilicon, in addition to buying the raw material for making the wafers. Production at LDK's first polysilicon plant is expected to begin soon and produce between 100 metric tons and 350 metric tons by December. The company is also building a second plant (see LDK Silicon Confirms Plant Is on Track). LDK CEO Xiaofeng Peng told analysts two weeks ago that the company had a backlog of more than 12 gigawatts of wafer orders. LDK expects to generate between $1.65 billion and $1.75 billion in revenue and ship between 750 megawatts and 770 megawatts of wafers for the whole of 2008.

Japan's Mitsui Mining and Smelting Co Ltd will invest 500 million ringgit to build a new plant for making copper foils in Malaysia, a newspaper reported on Friday. The new plant, specialising in high-productivity 12-micron and thinner copper foils, will have a production capacity of 1,200 tonnes a month once fully operational, the Business Times said. Construction work on first phase of the plant, with a capacity of 700 tonnes a month, will begin in November and will be completed by June 2010, it quoted Masayuki Misawa, managing director of Mitsui Copper Foil Sdn Bhd, in which the Japanese firm is a stakeholder, as saying. Work on the 500-tonne a month second phase will start immediately after that, he said. The new plant is being constructed in Shah Alam, next to an existing facility of the company which has a monthly production capacity of 1,600 tonnes.

Although volatility in most assets is sharply lower than it was in November, oil price volatility has continued to climb. This rise in volatility, and resulting near $30-a-barrel oil price, is reflecting the same imbalances in the energy market that $147 oil did last summer: namely inadequate investment in basic infrastructure to produce, deliver, store and distribute energy. Last summer, attention focused on shortages in production capacity. However, present underlying shortages in storage and transportation are creating massive price distortions across the energy complex. Storage and transportation capacity provides the system with a buffer to supply-and-demand shocks by allowing it to run surpluses and deficits that smooth the normal cyclical swings in prices. As global storage capacity has failed to keep pace with growth in global demand over the past three decades, this buffer has shrunk relative to the size of the market, resulting in chronically higher than normal price volatility. Once infrastructure begins to constrain the ability of the market to run imbalances, prices have to create more of the adjustment process. Electricity markets are an extreme case of this. As power cannot be stored, supply must always equal demand, leaving price as the only mechanism to force the adjustment process. Accordingly, electricity is the most volatile of all assets. Due to inadequate infrastructure investment over the past several decades, oil is looking more like the electricity markets.

The road to grid parity for PV power generation will be difficult, needing five or more years to compete with utility power, unsubsidized, on a large scale, noted Mark Thirsk, managing partner at Linx Consulting, at a recent SEMI PV forecast luncheon (Sept. 18) in Santa Clara, CA Most input materials for PV production are in relative oversupply and will not constrain production, Thirsk pointed out - and for this reason manufacturers are conservative about capacity investment. In particular, his PV module production forecast (see Fig. 1, above) shows an overstep in demand in 2008. One reason for suppliers' reluctance to build capacity for entering the silicon supply chain is that it is an inefficient process. "Only about 15% of all the silicon going into the supply chain goes into the wafers, so it's a pretty wasteful and capital intensive process, so there is a lot of reluctance to build capacity," said Thirsk. Despite the efficiency challenges, Thirsk's forecast indicates that an oversupply may occur in 2009 Because >40% of PV grade silicon is lost at the wafering step, Thirsk believes this represents a significant opportunity for the right technology. Additionally, diamond wire is a potential replacement for slurry technology, but this technology is still immature. In the crystalline silicon (c-Si) value chain, Thirsk sees opportunities for optimizing mono-crystalline wafers with metal wrap technology and backside contacts; process optimization and material improvements would improve cell efficiency, and glass, wafer, backsheet, and grid improvements can enable more efficient light capture. Looking ahead, Thirsk told the audience that while thin-film technologies will enjoy strong growth "and may be more attractive to value-add materials and equipment suppliers, thin-film cell production will remain a minority share for the medium term." (see Fig. 3, below) He closed his presentation encouraging the creation of a Moore's Law type of roadmap for the PV

Jinglong Electric Material Co. Ltd. has started a special type enamelled wire project in Tongling City, Anhui Province. The company was established in 2003, engaging in the production and sale of enamelled wire. Capacity was restricted to 10,000t per annum due to dispersed plants. But by consolidating operations, Jinglong will reach annual capacity of 25,000t, also meeting local copper demand. The new project occupies 53,000m2 whilst its investment amounts to 80M yuan (US$11.7M). It is anticipated that upon reaching full capacity, the company will realise annual revenues of 950M yuan (US$139M).

It was reported that China's Amer International expects to complete construction of its new 250,000t/y copper rod production line, located in its Chaohu City facility in Anhui Province, by year-end. The expansion project will bring Amer's production capacity to 500,000t/y and its total copper rod production is anticipated to reach 200,000t in 2011. A spokesperson for the company said that it will manufacture rod for both domestic and foreign export markets. In addition, Amer also intends to source copper cathode for rod-processing from within China and also overseas. Total investment for the project amounted to RMB2.5B.

Southwire, the US-based aluminium and copper cablemaker, has said that while the use of copper in most electrical applications is unlikely to change, some manufacturers are likely to move toward the use of aluminium wire. The auto industry is increasingly using aluminium wire for traditional copper applications. This is occurring most predominantly outside of the US, however domestic autos companies have also been using aluminium wire for battery cable and aluminium wire harnesses for lights. Southwire stated that for most electrical applications copper usage will remain dominant because of its overall reliability.

Guangzhou Jiangtong Copper products, a subsidiary of Jiangxi Copper, announced that it began trial production at its new 400,000t/y copper wirerod plant this week. The company expects to supply nearby consumers in southern China as well as those in foreign markets in Southeast Asia. Capital investment expenditure totalled RMB2.0B.

""We are targeting 48,000 at full capacity for cables and 30,000 at full capacity for aluminum. We also aim at over 50bn capacity in the next 24 months. Our expectation is not only in Nigeria but across Africa. "

Xingye Copper International Group Ltd. raised its copper plate and strip capacity to 80kt. Capacity expansion has been achieved by improving technology. The company is a major high precision copper plate and strip producer in China with two plants in Cixi City, Zhejiang Province and Yingtan City, Jiangxi Province. For FY2008, Xingye Copper reported operating income of 1.758 billion yuan, down by 16.1% y-o-y, and shipments of 44,387 tonnes compared to 51,889 tonnes in 2007.

Paranapanema announced that it approved a capacity expansion and technology modernisation plan, supported by a positive macroeconomic outlook and favourable price trends for its products. The market will be boosted by Brazil's anticipated economic growth, and in particular by infrastructure, civil construction, electricity and green power projects. In addition, the 2014 World Cup and 2016 Olympic Games will provide further support. Paranapanema will increase its refined copper capacity at its Dias D'Avila unit from 230,000tpy to 280,000tpy in H1 2012. The company will also install a precious metal refining plant at the same unit, scheduled to be operational in H2 2012. Paranapanema's copper semis division, Eluma, will expand its cold rolling capacity from 28,000tpy to 55,000tpy. Furthermore, hot rolled products capacity will rise from 60,000tpy to 200,000tpy whilst tube capacity from 18,000tpy to 36,000tpy. Investment of the entire plan for 2011-13 will amount to 630 million reais (US$377 million).

"Brazilian copper products manufacturer Paranapanema's (Bovespa: PMAM3) board has approved an investment plan of 630mn reais (US$377mn) for the 2011-13 period."

Chinalco Kunming, a Yunnan-based producer of low-oxygen copper wirerod, announced that it will increase its output of copper wirerod to 150,000t in 2013, up from 40,000t in 2012. The company started trial production in 2012 and operated below capacity for most of the year, with output of 5,000t in November and 4,000t in December. The company said its facilities have an production capacity of 220,000t at full capacity.

Antaike reported that newly added copper wirerod capacity amounted to 2.55Mt/y in 2011 but is expected to rise at a slower rate between 2012 and 2014. Total additional capacity is currently projected to be 3.89Mt/y across that date range. Investors are attracted to copper wirerod projects because of the combination of high yield, low capital cost and a perception of good demand prospects for the domestic power cable industry.

Sony Corp will invest about 40 billion yen (US$372 million) to boost its output capacity of lithium-ion batteries amid growing global demand, the company said. On top of plans to increase production in Singapore and China, the Japanese consumer electronics firm said it will build new facilities and enhance existing lines in Japan, hoping to expand output capacity to 74 million cells per month in 2010 from the current 41 million cells. "This is the first phase of investment in lithium ion batteries Sony is undertaking as part of efforts to reinforce core areas of its component and semiconductor business over the next three years," the company said in a statement.