So, as we bob along in the US pablum news cycle, a news nugget unknown to many of us is the fact that China is undergoing a building boom that is driving the price of copper to record levels. Despite reports of plummeting rents and rising office vacancies in Shanghai, China is consuming vast amounts of extracted resources from countries like Chile and Peru for large scale electrification projects.
In particular, copper is in heavy demand. And with heavy demand comes high prices. On the Shanghai market, for instance, copper was recently selling at ca $4.50 per pound and a bit lower on the London exchange. Prices are up sharply since the Cu price collapse in 2008.
According to Bloomberg Business Week, 2009 copper sales of $9.8 billion to China represents 19 percent of exports and 6 % of GDP to Chile. Chile is experiencing a boom in copper exports from what some are viewing as a Chinese construction bubble.
China is not buying copper in the form of finished goods. It is buying ore concentrates from operations like Cerro Verde in Peru. After ball milling, the copper sulfide ore is concentrated by froth flotation and eventually put on a boat to China. There it will be refined to a grade suitable for electrical use.
And speaking of metals, China has announced it will speed up exports of rare earth elements to Japan. This is good news for all of us since Japan is one of the major consumers of REE’s out side of China. Interestingly, 20-30 % of China’s rare earth output smuggled out of the country.