Freeport CEO sees copper prices staying high: Report

With inventory levels still low, copper prices are likely to remain high in the short term even as production of the metal ramps up, the chief executive of mining company Freeport-McMoRan said on Wednesday.

But whether the market moves into surplus depends on whether the U.S. economy continues its strong growth and demand for the metal from China remains high, Richard Adkerson told the Reuters mining summit.

He also said a lack of new copper deposit discoveries could see current known mining deposits depleted in 30 years.

?With inventories being at the level they?re at, if there?s strong economic performance in China and the U.S., copper prices will be very strong,? Adkerson was quoted by Reuters as saying.

However, ?the low levels of inventory we have seen recently create an environment where it's very difficult to say what's going to happen. The risks to the copper market are well known and they relate to the economy in the U.S. principally, and developments in China.?

Adkerson heads New Orleans-based Freeport, which operates the giant Grasberg copper/gold mine in Indonesia. That mine was hit by a landslide in late 2003 which killed eight workers and curtailed production for a time.

He told journalists at Reuters' New York headquarters the mine was now back to normal production and the company projected it would produce 50 percent more copper this year and twice as much gold.

?I have worked in natural resources since the '70s and the one thing I know about commodity prices is that they are affected by forces no one can see coming,? he said.

?The unknown from the production standpoint is like what happened to our mine in 2003.?

Asked if he saw the copper market moving into surplus any time soon, he said: "That all depends on demand factors.

?There will be higher mine production this year than last.

?A number of other established mines have been ramping up to historical levels of production. So there will be more production this year. (But) Indications are that the rate of growth won't be as strong next year.?

Still, there are a limited number of mines and, consequently, ?If there are disruptions in a major mine or smelting business it could be very tight.?

Adkerson said Freeport had an active exploration program linked to its Grasberg operations. ?Our focus is on Indonesia because it's prospective, (and) we have the infrastructure.

However, ?There is an absence of new projects for copper, unlike in the ?90s when there were a number of major new mines. We are not seeing big new copper discoveries and in 20-30 years the current ones will be depleted.? (*)