A looming, copper-bottomed, threat to communities « Mining Blog

A looming, copper-bottomed, threat to communities

13. January 2013,

“It’s simply criminal”. That’s what, in January 2011, Mines and Communities (MAC) called “the type of purely speculative activity that currently seems to be driving the [copper] market to bullish heights” [http://www.minesandcommunities.org/article.php?a=10660&l=1]

At the time MAC declared that “the recent copper market boom is a dangerous illusion… triggering potential massive new investment in existing mining projects and… spurring revival of mines which should have been properly closed down and rehabilitated years ago”

This wasn’t the first occasion on which MAC had sounded a warning bell. Back in October 2009, it quoted a well known UK specialist in copper markets, Simon Hunt, as asking: “Could the drove of optimists – now creeping out of the woodwork all over the shop – have got it seriously wrong? If so, prudence alone (not to mention ethics) requires a concerted shift to a global post- mining scenario”.

In November 2010, the market price of copper began rising to unprecedented heights, spurring the huge investment bank, JPMorgan, along with BlackRock, the world’s most diversified investor in mining, to propose setting-up commodity-based exchange traded
funds (ETFs) which would buy and store the metal in their own warehouses.

Their ostensible aim was to promote copper as a “store of value”, similar to that long-established for gold. But, as Simon Hunt warned at the time: “The record copper price is being driven by speculators, hedge fund buying, and Chinese stockpiling and hoarding. Although copper is up 55% since its low of $2.77 in late June [2010], the supply and demand fundamentals simply do not support all time record prices”.

Hunt’s view was supported by geologist Micky Fulp, who commented:
“At this juncture, it does not appear to me that basic supply and demand fundamentals are strong for the copper market in the short term. There is evidence to indicate that the market is overbought by speculators and hoarders.

“That said, there are other factors, especially the new copper ETFs that could drive prices substantially higher”.

In recent weeks, JPMorgan has apparently won the day, having been granted permission by the US Securities and Exchange Commission (SEC) to set up its XF Physical Copper Trust Fund – an ETF in all but name – and store copper under its own control.

The move has already been heavily attacked by a New York law firm (representing copper fabricators) which claims it will “grossly and
artificially inflate prices for an industrial commodity in short supply and …wreak havoc on the US and global economy.”

Micky Fulp agrees, saying that “since 30% of the copper stored in warehouses is not available to the market, prices might skyrocket.”

For which we should read: more exiguous profits for the hoarders, hedge funds and unscrupulous traders, as consumers pay well over the odds for a vital metal whose supply is being deliberately “shorted”.

Inevitably this will spur the opening, re-opening, or expansion of copper mines the world certainly doesn’t need, creating even further trials and tribulations for communities across the planet, from Argentina, Bougainville and DR Congo, through Panama and Peru to the USA and Zambia, who will suffer the consequences

To re-iterate what MAC wrote in January 2011: “Digging copper has long proved one of the most damaging and life-threatening
activities in the extractive sector.

“There might be justification for mining the red metal, so long as it is used to improve peoples’ lives – notably by bringing electricity to their homes… But there’s surely only one way to describe the type of purely speculative activity that currently seems to be driving the market to bullish heights. It’s simply criminal”

(For latest news on a huge copper deposit in Panama, which is currently subject to a takeover battle between banks and other mining funds, see: http://moneytometal.org/index.php/Leucadia_National)

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