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Metals surge as lights go out at world's biggest mines
Chile's worst drought in five decades and power rationing from South Africa to China mean the price of aluminium, gold, copper and platinum will keep climbing as the lights go out in the world's biggest mines.
- Bloomberg
- Published: 00:11 May 6, 2008
London: Chile's worst drought in five decades and power rationing from South Africa to China mean the price of aluminium, gold, copper and platinum will keep climbing as the lights go out in the world's biggest mines.
Those governments are being forced to choose whether to reduce power to their 1.4 billion residents or curtail energy supplies to the world's biggest copper, aluminium, platinum and gold factories. The energy used by China's aluminium smelters each week could provide enough power for more than 2 million people for an entire year.
Runaway growth in emerging markets that's squeezing world oil supplies has led to electricity shortages, cutting output of commodities needed for ever-rising demand. Platinum jumped to a record in January after mines in South Africa closed for five days as utilities rationed power. Cobalt gained 58 per cent in the past year as production growth in Congo was limited by electricity supply.
Sustained risk
"There will be a sustained level of risk from power shortages in the commodities markets," said Michael Lewis, London-based global head of commodities research at Deutsche Bank AG. "We are pricing bigger supply losses as a result."
Metals are headed for a seventh straight year of price increases even as the worst US housing slump reduced consumption in the world's biggest economy.
Platinum, used in jewellery and car parts, climbed 25 per cent since the end of December to $1,911 an ounce in New York yesterday, while aluminum gained 21 per cent to $2,920 a metric tonne on the London Metal Exchange (LME). Copper climbed 26 per cent to $8,410 a tonnes on the LME.
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