Base metal prices to remain high

BHP Billiton Ltd says base metal prices will remain around historical highs for some time to come. In its base metals briefing, base metals division president Diego Hernandez said the market fundamentals were sound. He said that with low stocks and healthy demand, prices should remain around historical averages for some time to come.

Marketing director John Crofts said he expected copper prices would stay at current high levels after a series of disruptions caused lower supply. Until stocks are rebuilt, BHP-B would not expect prices to fall back to more recent levels. Independent analysts were tipping the market would move back into surplus later in 2006 or early 2007.

Crofts said BHP Billiton expected it would be in 2007 when more supply was available as the refined market currently looks positive in terms of demand.

The Cannington base metal mine in Australia was continuing to deliver outstanding performance and silver and zinc have continued strongly in the second half of the financial year 2005/06, according to chief operating officer Roger Higgins.

The Olympic Dam base metal and uranium mine has been experiencing a bottlenecking recently and Higgins said the company was now trying to build up stock levels for processing to eliminate this problem.

A study considering an expansion of the uranium production of the mine is now underway and a conventional open cut mine was firming as the preferred option. BHP-B anticipates commissioning and ramp-up to full capacity in 2013/2014.

The Olympic Dam mine would operate at around 600,000 tonnes a year, including the production from the existing underground mine and the new production from the planned open pit.