Issue link: http://resourceworld.uberflip.com/i/783264
F E B R U A R Y / M A R C H 2 0 1 7 www.resourceworld.com 49 could be in excess of $3 billion. Copper Fox is also involved in a second BC project – the Eaglehead copper-molybdenum-gold property – through its 65.4% stake in Carmax Mining Corp. [CXM-TSXV] as well as two early stage copper projects in Arizona, called Mineral Mountain and Sombrero Butte. "I pay a lot of attention to Chinese imports," said Elmer Stewart, Chairman, President and CEO of Copper Fox. "They [the Chinese] have definitely increased their consumption quite a bit,'' he said. Stewart said global production challenges such as the need to dig deeper for economic ore, are making copper more dif - ficult and expensive to produce. "The all-in sustaining cost for copper in 2015 was US $2.20 a pound," Stewart said. It is inevitable that the price of the metal has to move higher than the all-in sustaining costs, otherwise you are going to see a lot of supply disruption," he said. However, those challenges did not prevent mine production from doubling between 1994 and 2014, according to CME Group, the world's leading derivatives market. CME warned that mine supply may continue to increase as it did between 2008 and 2010 in spite of the global financial crisis. The view is echoed by the Thomson Reuters GFMS Annual Copper Survey. It predicted that primary production will continue to grow over the next three years, albeit at a slower pace than in the past as miners deliver on investments made when the copper price was much higher than it is now. World mine production was up 3.5%, or 652,000 tonnes, in 2015 to just over 19 million tonnes, according to GFMS. That compares with a 2.1% rise in 2014. GFMS said Peru led the pack with a 28% rise in production, which saw it surpass the US in global rankings to take third place behind Chile and China. Major projects in the production pipeline include a $5.3 bil - lion expansion of the Oyu Tolgoi copper-gold mine in Mongolia, which is held by mining giant Rio Tinto PLC [RIO-NYSE, ASX LSE] and its Canadian affiliate Turquoise Hill [TRQ-TSX]. The mine is located in the Gobi desert, close to the border with China. Initial production from the underground expansion is expected by 2020. Once the expansion is fully complete, Oyu Tolgoi will be producing an astounding amount of copper, 560,000 tonnes annually, along with gold and silver by-products. The expansion in Mongolia fits with Rio's bid to become one of the world's lead - ing copper producers. In doing so, it hopes to reduce its reliance on iron ore. Meanwhile, the biggest near-term supply risk (and upside potential for copper prices) is a potential suspension of concen- trate exports from Freeport McMoran Inc.'s [FCX-NYSE] huge Grasberg Mine in Indonesia. The ban on copper concentrate exports from Indonesia was supposed to begin on January 12. n COPPER