Copper Production Slowing May Benefit Arizona
The world’s largest copper mine, BHP Billiton, said it will not meet production goals in Chile after a wage dispute last week stopped production. This comes at the same time an export ban has caused Freeport-McMoRan to cease work in Indonesia, after it failed to reach an agreement on a new mining permit with the government.
Both announcements are expected to cause copper prices to rise. But that is not necessarily a bad thing for Arizona, said John Kemeny, Professor of Mining and Geological Engineering at the University of Arizona.
“You know, I think the result of these slowdowns in production is the increase in the price of copper, which could actually benefit the mines that are producing in Arizona because they might sell at a higher price,” Kemeny said. “And so the economic impact of the copper that we mine in Arizona is quite large. It’s in the billions of dollars. There’s direct benefit and also indirect."
Kemeny said a production slowdown from across the globe may drive a production increase in Arizona’s mines to fill in for global gaps and the higher price is good for Arizona's mining industry.
But, he cautioned, the price increase will also affect consumer goods and that is not always viewed positively.
As the price of copper rises over the long run, products made with copper, like cars, electronics and wiring will also cost more.