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Copper prices that have risen five- fold in the past decade are the new normal and are unlikely to return to levels seen prior to 2006, said Felipe Larrain, finance minister for the world’s top copper miner Chile.
The price of the metal has averaged $3.61 a pound this year, compared with $1.79 in the decade through December 2009 and up from $0.71 on Nov. 14, 2002. Copper will average $3.54 a pound in 2012 and $3.40 in 2013, before increasing to $3.45 in 2014, according to forecasts made by Chile’s government.
“There has been a dramatic change, a structural change, in the copper market,” Larrain said in an interview today. “I don’t believe we will see copper prices going back to $2, $2.5. That would happen in the very worst part of the cycle, but not as a structural issue.”
Chile’s government is a net creditor to the world and receives an additional $50 million in fiscal revenue and $120 million in export revenue every time the average copper price rises by one cent for the year, said Larrain. The metal accounts for more than half of the country’s sales abroad.
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