CVRD's Major Copper Diversification to Generate $2 Billion Exports for Brazil by 2010

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Global copper market prices are expected to remain high, parallel to a continued shortage in supply. Brazil is anticipating that a major portion of the $4 billion to be invested in mining projects will go into copper production projects, followed by investments in bauxite and nickel projects.

This was stated by Brazil's Energy and Mines minister, Dilma Rousseff, at the opening of CVRD's (NYSE:RIO)(Rio de Janeiro, Brazil) Sossego copper mine at Carajas in the northern state of Para at the beginning of July. This is CVRD's first copper mine and is part of its plan to diversify away from being a company whose business is dominated by one product - iron ore.

By the end of 2010, the company forecasts that it will have investments of $2 billion in copper production, which will generate $2 billion in foreign exchange, according to CVRD president Roger Agnelli. The company currently has five copper mines planned, including Sossego, and by 2010 expects the annual output of copper concentrate to be 650,000 tons. The mine exported its first 30,000 tons of copper concentrates at the end of June. Europe and Asia are the chief export markets being targeted.

Government officials, including President, Lula da Silva said that the performance of CVRD, South America's largest diversified mining company, boosted the country's foreign exchange and investments in copper and will help to diversify Brazil's mineral exports which are dominated by iron ore and bauxite.

The $413 million project has two ore bodies with proven and probable reserves of 244.7 million tons of copper ore. Copper content is estimated at 1% plus 0.26 grammes per ton of gold, which will be produced as a by-product. Sossego has a 467,000 ton per year copper concentrate processing plant, which is equivalent to 140,000 tons of copper a year. The mine's life is estimated to be 17 years.

The International Copper Study Group (ICSG) has issued figures upon which the London broker Numis Securities forecasts that there will be a 750,000 ton copper supply deficit in 2004, and a deficit of 521,000 tons in 2005. The broker says the figures imply exchange inventories of less than 100,000 tons and LME (London Metals Exchange) stocks below 40,000 tons by the end of 2004. Current LME stocks stand at 100,000 tons, which is the lowest level since 1996. The global copper inventory is estimated at 970,000 tons, which is equivalent to four weeks of total annual consumption. This supply squeeze is happening, despite the brakes being put on China's industrial growth. New highs in copper prices are very possible.

View Project Report - 67000328 - 67000429 - 67000574 - 67000329