A few offhand comments last week may show a massive new plan underway in global copper investment; one that could see major consumer China take the metals world by surprise.
Reuters reports that high-level Chinese officials gave some strong hints of such a move at an industry conference last week in the southwestern city of Nanning, saying that Chinese companies may use a recent geo-strategic initiative as a device to control copper concentrate supply. Related: U.S. Shale Drillers Running Out Of Options, Fast
The development in question is China's new "Silk Road" investment initiative. A policy I've previously discussed in relation to the gold market, but which now looks set to impact base metals as well.
Under the Silk Road plan, China is building stronger economic links with nations along the ancient trade route -- spanning 60 countries from the Stans through to Iran, Turkey and Serbia. And that creates a major opportunity in copper, according to speakers at last week's Nanning conference. Related: Is Russia The King Of Arctic Oil By Default?
China's state metals research firm Antaike kicked off the theme, with senior analyst Yang Changhua telling conference attendees that many Silk Road nations produce substantial amounts of copper ore -- but few possess large-scale copper smelters.
Changhua pointed to this a major opportunity for Chinese metals companies, suggesting that Chinese firms should preferentially buy copper concentrates from these countries for processing at facilities in China. Related: Stop Blaming OPEC For Low Prices
He also noted that Chinese firms should cement their influence in Silk Road copper nations by building smelters in these countries. A sentiment that was later echoed at the conference by the head of copper for China Nonferrous Metals Industry Association, Duan Shaofu -- who said at least one Chinese metals firm is looking at constructing a copper smelter in Kazakhstan in "support of Beijing's strategy."
Those last words suggest a concerted effort is underway to control copper supply in this important producing region; an important note for both buyers and sellers in the copper market.
Here's to exploring the road,
Dave Forest
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