2013 Top 10 Copper-producing Countries

In terms of copper production, it’s Chile that accounts for the lion’s share of world output. However, there are still several other countries with significant operations, including neighboring Peru, as well as China, the United States and Russia. 

 

The US Geological Survey has released its most recent set of data on copper-producing countries, and Copper Investing News took a look to see which made the top 10. Below is a list of those countries, along with a little background information on each nation.

 

1. Chile

Mine production: 5,700,000 tons

 

Up first is Chile, which produced a whopping 5,700,000 tons of copper in 2013. That’s up from 5,430,000 tons in 2012. As The Economist reports, the red metal provides 20 percent of the country’s gross domestic product and accounts for 60 percent of its exports. The publication also notes that thanks to copper, Chile’s economy is expanding by 6 percent annually; it also credits the industry with the country’s low rates of inflation and unemployment.

 

2. China

Mine production: 1,650,000 tons

 

China is the closest second, producing less than half of what was put out by Chile. It recorded 1,650,000 tons of copper production in 2013, an increase from the 1,630,000 tons produced in 2012. China, the world’s largest single consumer of copper, hit record rates of production for the red metal in November 2013, according to Reuters. New production sites continued to come online through 2013 in China, increasing production at a steady rate. Additionally, importing raw copper concentrate to China is costly, causing domestic smelting operations to begin to rise.

 

3. Peru

Mine production: 1,300,000 tons

 

Peru produced 1,300,000 tons of copper in 2013, not moving much from 2012 production level. Peru This Week reported that the country’s mining production could rise by as much as 10 percent in 2014, and Peru’s energy and mines minister, Jorge Merino, has projected a 17-percent increase in copper production alone as the result of several new projects set to open in the year ahead. The country also expects more foreign investment into its mining sector as a result of these projects.

 

4. United States

Mine production: 1,220,000 tons

 

The US saw 1,220,000 tons of copper production for 2013, up slightly from its figure of 1,170,000 tons in 2012. MINING.com notes that this increase came despite a catastrophic landslide at Utah’s Bingham Canyon mine in early 2013; the incident caused it to cease production for an extended period of time. The total copper production in the US is worth more than $1 billion.

 

5. Australia

Mine production: 990,000 tons

 

In 2013, 990,000 tons of copper were produced in Australia, marking an increase from 958,000 tons in 2012. Geoscience Australia, a government agency, notes that most of the copper resources in the country are located in Queensland and South Australia, though there are resources in each state and in the Northern Territory as well. Most of the country’s production is centered in the Mount Isa region in Queensland and the Olympic Dam mine in South Australia.

 

6. Russia

Mine production: 930,000 tons

 

Russia ranks sixth, having produced 930,000 tons of copper in 2013. That level is up from 883,000 tons it produced in 2012. NASDAQ reports that Russia has about 10 percent of the world’s copper reserves, and that these deposits are located primarily in Siberia and the Urals. The vast majority of Russian copper projects are in remote regions, away from population and infrastructure, which makes mining operations relatively difficult. Additionally, the country has laws restricting the amount of foreign investment in its mineral reserves.

 

7. The Democratic Republic of the Congo

Mine production: 900,000 tons 

 

The Democratic Republic of the Congo produced 900,000 tons of copper in 2013, a significant rise from the 600,000 tons produced in the country in 2012. The International Monetary Fund believes this level of production may spur the country’s economic growth to the tune of 8.7 percent in 2014, according to Bloomberg. In 2012, the mining industry comprised more than 15 percent of the Congo’s gross domestic product, the news outlet notes.

 

8. Zambia

Mine production: 830,000 tons

 

In Zambia, 830,000 tons of copper were produced in 2013, marking an increase from 2012′s 690,000 tons. 2013 saw several new copper projects begin in Zambia, boosting production by 21 percent in the first 11 months of the year, according to The Wall Street Journal.

 

“We are at a level where most copper projects that have been in the pipeline a few years back are coming on stream,” Fredrick Bantubonse, an independent metal analyst based in Zambia, told the Journal.

 

9. Canada

Mine production: 630,000 tons

 

Canada just made it into the top 10 with 630,000 tons of copper production in 2013, up from 579,000 in 2012. Natural Resources Canada notes that copper volume and value both increased despite decreases in the metal’s price throughout the year. The organization attributes this rise to new mine openings by Glencore Xstrata (LSE:GLEN) and Hudbay Minerals (TSX:HBM) that took place in 2013.

 

10. Mexico

Mine production: 480,000 tons

 

Coming in at number 10 is Mexico, which produced 480,000 tons of copper in 2013 to clock an increase from the 440,000 tons it produced in 2012. Like other countries on the list, Mexico forecasts increases in copper production over the next two years, as per Bloomberg. However, the publication notes that copper prices will need to remain steady in order for that to occur.

Commodity Transaction Tax to be diluted in Budget

The Commodities Transaction Tax is likely to be revamped in the coming budget.

Under the new system, compulsory delivery-based contract may be exempted from the tax, which means only speculative trade will attract the levy.

This tax was imposed on July 1, 2013 on the line of securities transaction tax.

It is levied at the rate of 0.01 per cent on all non-agricultural products such as gold and silver and even on processed agricultural processed products such as sugar. At this rate, tax for trade worth ₹1 lakh would be ₹10.

Volume dips

Data from the Forward Market Commission reveal that cumulative value of trade during April-May this fiscal dropped to ₹9.53 lakh crore from ₹28.16 lakh crore in the same period a year ago, a dip of 66 per cent.

“Volume has come down which is affecting fair price discovery,” SC Agarwal of SMC Securities, a Delhi-based equity and commodity trading firm, said. Traders also alleged that this tax made exchanges 350 per cent more expensive.

At the same time, non-agricultural commodity consist of over 80 per cent in total trading, which is why trade has been affected.

Though, participants want the tax to be removed completely, there are no such indications as of now.

Many market players raised the demand for doing away with the transaction tax completely before the Finance and Economic Affairs Secretary Arvind Mayaram during a conference organised by Commodity Participants Associations of India on Saturday.

Regulator’s wish list

Meanwhile, the FMC has pressed for lowering the transaction cost.

This was conveyed during Finance Minister Arun Jaitley’s meeting with all the regulators of financial sector in Mumbai few days ago.

Weekly Economic Data for the week 14-Jun-14 to 20-Jun-14

Avg. change of last 1 year:	Average Change in Actual data calculated for last 1 year.
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Data for the week 14-Jun-14 to 20-Jun-14

Date	Time (IST)	Country	Data	Exp.	Prior	Exp. chg today	Avg. chg of last 1 year	Exp. Impact on Price
16-Jun-2014	12-00 PM	India	Wholesale Prices YoY	5.4%	5.2%	0.20	0.46	Neutral
16-Jun-2014	02-30 PM	European Monetary Union	Consumer Price Index (MoM)	-0.1%	0.2%	-0.30%	0.65	Neutral
16-Jun-2014	02-30 PM	European Monetary Union	Consumer Price Index (YoY)	0.5%	0.5%	0.00%	0.07	Neutral
16-Jun-2014	06-45 PM	United States	Industrial Production (MoM)	0.5%	-0.6%	1.10%	0.97	Neutral
17 - 19 Jun-2014	--	United States	Federal Reserve FOMC Meeting					Neutral
17-Jun-2014	02-00 PM	United Kingdom	Consumer Price Index (MoM)	0.20%	0.40%	-0.20%	0.00	Neutral
17-Jun-2014	02-30 PM	Germany	ZEW Survey (Expectation)	35	33.1	1.90	9.00	Neutral
17-Jun-2014	02-30 PM	Germany	ZEW Survey - Current Situation	62.1	62.1	0.00	5.46	Neutral
17-Jun-2014	06-00 PM	United States	Consumer Price Index (YoY)	2%	2%	0.00%	0.25	Neutral
18-Jun-2014	05-20 AM	Japan	Bank of Japan November 20-21 meeting minutes					Neutral
18-Jun-2014	02-00 PM	United Kingdom	Bank of England Releases Minutes From June 4-5 Meeting					Neutral
18-Jun-2014	04-45 PM	European Monetary Union	Merkel, Tunisia's Jomaa Brief Reporters in Berlin					Neutral
18-Jun-2014	08-00 PM	United States	EIA Crude Oil Stocks change	--	-2.5	2.50	3.45	Neutral
18-Jun-2014	11-30 PM	United States	FOMC Rate Decision	0.25%	0.25%	0.00%	0.00	Neutral
19-Jun-2014	--	United States	Fed's Yellen Holds Press Conference After FOMC Meeting					Neutral
19-Jun-2014	08-00 PM	United States	EIA Natural Gas Storage change	--	107	-107.00	33.60	Neutral
20-Jun-2014	12-06 PM	Japan	BOJ Governor Kuroda Speaks at Conference in Tokyo					Neutral
20-Jun-2014	07-30 PM	European Monetary Union	EC - Consumer Confidence	-6.5	-7.1	0.60	1.04	Neutral

Vale and Amazon Indians begin talks after threats of setting mine on fire

Brazil’s Vale (NYSE:VALE) and members of the Amazon Xikrin tribe made short-term peace late Saturday after Indians blocked access to the company’s Onca Puma nickel mine in the country’s northern state of Para for two days.

According to Vale, Brazil’s largest mining company, over 400 Indians had been blocking the main entrance to Onca Puma, threatening to set it on fire if their demands were not heard.

The firm, the world's second-largest nickel producer, said in a statement quoted by AP that locals want to modify an agreement to mitigate the mine's impact on its community's development.

Negotiations over the Indians demands will resume Monday, the company added

Onca Puma began operation in 2011 and it is expected to hit 60% of its 53,000 tons of nickel annual capacity this year. In 2012, Vale faced furnace design problems, and it was forced to shut down the operation in June. Later that year, the firm had to take $2.85 billion write-down on the nickel mine.

Government mulling changes in Securities Transaction Tax and Commodities Transaction Tax

The government is mulling changes in the transaction tax levied on trading in stocks and securities, a levy that is generally considered regressive and its removal can spur the markets further by lowering transactions cost and increasing liquidity. 

Although the market has been demanding a complete withdrawal of the Securities Transaction Tax (STT) and the Commodities Transaction Tax (CTT), the government may initially settle for their removal only on delivery-based trades, a senior government official hinted. 

At least two regulators — the Securities & Exchange Board of India and the Forwards Markets Commission — have also sought removal or rationalisation of these taxes. 

"Indian securities markets are being exported outside of the country and this is largely due to high transaction costs....There is a need to relook at these if the country is keen to become an attractive financial centre," the official said on condition of anonymity. However, given the country's high fiscal deficit, the government will consider the revenue implications of the proposal before taking a call. 

STT earns nearly Rs 6,000 crore revenue a year. The tax was introduced by the then finance minister P Chidambaram. In lieu, the long-term capital gains tax was abolished and the tax on short-term gains lowered. 

Market participants and commodity exchanges have pointed out that these taxes were coming in the way of markets gaining depths as as they increase transactions cost, which reduces market participation and lowers liquidity. 

In case of stocks, STT is levied at the rate of 0.1% on both the seller and the buyer. On derivatives, the tax ranges from 0.01% to 0.125% and is levied on the seller only. 

Sebi has demanded removal of STT on at least one leg of transaction, stock purchases, as also CTT on delivery-based transactions. FMC has also asked the government to remove CTT on such transactions besides on some processed foods such as coffee and guar gum. 

"Transaction taxes hurt volumes....World over, the trend has been to reduce transactions costs for market participants," the official quoted earlier said. 

CTT is levied at the rate of 0.01% of the transaction value on the seller for trading in all non-agricultural commodities such as gold, silver, crude, zinc, copper and aluminium. 

A high-level expert panel headed by senior economic advisor in the finance ministry D S Kolamkar has pitched for allowing banks, financial institutions and foreign firms participate in commodity futures trading to deepen domestic markets. 

Exchanges should explore new ideas in contract design, to more tightly define the product with a narrower set of grades and locations, so as to reduce the frictions of arbitrage and, thereby, improve hedging effectiveness wherever the movement of prices of the commodities across grades and locations are not aligned, the panel had said. 

"Commodities markets need a whole set of reforms as also reduction in transaction costs," 

Abolish CTT, restore investor confidence in commodity market

While the stock market is expecting that Jaitley would remove STT—at least partially, a similar tax under the name of CTT implemented in commodity futures market needs to be abolished to help the industry grow.

As the Narendra Modi government gets ready to present its first national budget, there is an urgent need for the apex commodities regulator—the Forward Markets Commission (FMC)—to pitch for the abolition of Commodities Transaction Tax (CTT) and plead before Finance Minister Arun Jaitley to save the commodity futures market.

Reports in the media say that the apex stock market regulator—the Securities and Exchange Board of India (SEBI)—officials have met with the Finance Minister to demand the removal of Securities Transaction Tax (STT). Stock exchanges and traders are hoping that abolition of STT would be a major announcement in the budget that Jaitley would present a few days from now.

Currently, an investor buying shares through a broker is charged 0.1 percent STT at the time of buying and selling. Ever since the introduction of STT a few years back, volumes in India’s two national stock exchanges—BSE and NSE—have considerably come down on account of the increased transaction costs.

SEBI, stock exchanges, brokers and investors have been complaining that transaction costs of buying and selling shares in India are huge compared to other financial markets in the world. This has hurt investor sentiments and reduced liquidity, turning Indian stock markets less attractive in the emerging markets.

While the stock market is expecting that Jaitley would remove STT—at least partially, a similar tax under the name of CTT implemented in commodity futures market needs to be abolished to help the industry grow faster and better.

Former finance minister P Chidambaram introduced CTT in commodity futures trading in last year’s budget. It was then strongly opposed by commodity exchanges, traders, brokers and investors. Commodity trading in India is just 10-year old, and the government is yet to open up the futures trading sector with the result that banks, FIIs and mutual funds are not allowed entry into commodities trading market.

In India, more than 80% of the trade volumes take place in bullion, metals and energy and hence CTT has resulted in a significant drop in trade volumes in these segments that drove commodity futures business. Unlike in stocks or agri commodities, daily movements in the above mentioned commodities are generally very low, resulting in most of the profits that a trader makes are lost in the existing charges. Bullion, metals and energy prices are closely linked to international price movements and hence trade volumes have shifted to such global exchanges as hedgers try to minimise risk in commodities trading. This could result in India losing its place of pride in the international markets- that of having one of the top gold, silver and energy online exchanges in the world.

In Indian stock markets, STT was introduced after the market matured and attained huge trading volumes while electronic trading in commodity futures were introduced only 10 years back and the sector is still suffering from growth pangs. Hence the broking community is of the view that CTT should be abolished until the market attains sufficient trade volumes and depth.

Ever since CTT was introduced, in the last one year, volumes in commodity exchanges have drastically come down. To be specific, volumes at MCX and other national commodity exchanges are just a third of what it used to be an year ago.

Commodity futures market began losing steam in July 2013 when the government introduced CTT. CTT of 0.01 per cent on the sell side on all volume commodities in bullion and metals ensured that cost of trading shot up by at least 20 per cent. Many traders and intra-day players left commodities market as CTT virtually capped any arbitrage profit booking in trading. It is therefore essential that the new government should review CTT and remove or relax the taxing burden on the market participants.

In the last few years, the government has been debating amendments to the Forward Contract Regulation Act (FCRA) under which FMC is overseeing futures trading in India. The debate has not yet translated into action, with the results that commodity trading is still a restricted sector with banks, mutual funds and foreign institutional investors out of its ambit.

It was the BJP government under former prime minister Atal Behari Vajpayee who gave approval to set up national commodity exchanges in India in 2003. Now, a decade later, a new BJP government with a massive political mandate is in chair to the rule the country. India—one of the world’s largest consumers and producers of the largest varieties of commodities including the glittering precious metal gold—needs a more vibrant commodities futures market.

FMC needs to take up with the Finance Minister on the need to abolish CTT to bring liquidity and market depth the commodity futures trading in the country.

Bombay High Court refuses to stay MCX resolution

 The Bombay High Court has refused to stay a resolution by commodity exchange MCX to amend its articles, which, if approved by its shareholders, will empower the bourse to transfer promoter Financial Technologies' shareholding in it to an escrow account and sell the same on its behalf. 

The court, which was hearing Financial Technologies (India) Ltd's plea against the resolution on Friday, said a delay in selling stake by the petitioner cannot be a reason for it to oppose a resolution to comply with the regulator's declaration of December 17. 

However, the judge gave FTIL, which said it was in the process of divesting its 24% stake in MCX, the liberty to move court if its shares are transferred to an escrow account while its stake sale exercise is on. 

The voting rights of FTIL, which holds 26% in MCX, have already been extinguished by MCX after commodity market regulator Forward Markets Commission (FMC) on December 17 declared it not 'fit and proper' to hold more than 2% stake in any commex after a Rs 5,600-crore scam hit its subsidiary National Spot Exchange Ltd (NSEL) in July last year. 

FTIL had challenged FMC's order in the high court in February but failed to get a stay on it. After being informed of this, Justice SJ Vazifdar, who was hearing FTIL's plea, said, "We must proceed that the December 17 order (of FMC) is valid as on date." On Friday, FTIL's share closed 4.9% lower on the Bombay Stock Exchange at Rs 259.45, while MCX ended 2.4% lower at Rs 565.95. 

FTIL filed a petition against MCX and FMC after the latter, on May 6, revamped shareholding norms for commexes, stating that an entity or a person declared not "fit and proper" by it could not hold any stake in a recognised commodity exchange. 

The norms, among others, also empower exchanges to ensure FMC's orders in respect of an "unfit" shareholder are complied with. On May 9, after FMC's revised norms, MCX undertook a process of amending its articles of association, which,by a three-fourths majority of voting shareholders, empower it to transfer FTIL's shares in MCX to an escrow account, and sell the same on FTIL's behalf to comply with FMC's declaration. 

Multiple commodity Exchange has sought the approval of its shareholders, including IFCI, Nabard and Blackstone, for amending the AoA through postal ballot. The results of the ballot will be declared on June 18.