Market Basics » Copper
Description
Copper is a chemical element with the symbol Cu (Latin: cuprum) and atomic number 29.
Copper can be easily shaped, moulded, rolled into sheets, or drawn into thin wire. It blends readily with other metals to form useful alloys such as brass and bronze. It does not easily rust, and it's an excellent conductor of electricity and heat.
A freshly exposed copper surface has a reddish-orange color.
The use of copper and its principal alloys, bronze and brass, has been part of human endeavour from the earliest time. The greatest copper deposit ever found, at Rio Tinto in Spain, supplied the Roman Empire and gave its name to that company.
Trading Unit
One metric tonne or one imperial pound, generally quoted in U.S. dollars.
Units for delivery
Cathodes, billets, cakes or ingots.
Pricing mechanisms
Futures, spot, exchange traded commodities / funds, and hedging arrangements.
Copper is considered the pace-setter for other industrial metal pricing.
Avenues of trade
The global trade in copper consists of over-the-counter, or OTC, transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options.
Copper futures are the most regular way of gauging copper prices. Futures are traded on the COMEX division of the New York Mercantile Exchange (NYMEX) as well as the London Metals Exchange and the Shanghai Futures Exchange.
Copper also can be traded via exchange traded fund, or ETF, which allows investors to put money into the metal without owning any of it directly in a physical form.
Supply
Copper is a fairly abundant base metal, with the majority of production coming from the Americas, Asia and Europe. According to the World Bureau of Metal Statistics, Asia is responsible for about 43% of global production. In addition, the Americas account for 32% of world copper supply, and Europe produces about 19%.
About 88% of global copper supply yearly is new and comes freshly produced from mines, and about 12% comes from the recycling of copper scrap. The Mineral Institute estimates that mineable copper in the world totals 1.6 billion tons, and another 0.7 billion tons are available in deep-sea deposits.
Freeport McMoRan Copper & Gold Inc. is the world's largest publicly traded copper producer. Other notable copper-producing companies include Anglo American Plc and Rio Tinto Group.
Demand
Copper is widely used in telephony and the conduction of electricity - electrical and electronic products account for about 75% of total copper usage - but it is also widely used for heating, air conditioning, plumbing, roofing and transportation. Building construction, which accounts for about half of all copper use, is the single largest copper market, according to BaseMetals.com.
Copper also is used to produce brass and bronze alloys, and various copper compounds and chemicals are used to protect plants and preserve wood.
Extraction, Processing, Refining & Supply Chain
Copper is mined either via open pit mines or underground mines.
In open pit copper mining, the ore is broken free and reduced to a manageable size by blasting. Mechanical shovels are used to load the broken ore into haul trucks, which take it to the crusher.
Underground mining of copper usually involves block caving, a technique that uses gravity to extract copper ore from the mine. In block caving, mining engineers create a cave below the ore deposit, causing the ore to break away from the ceiling and fall into the cave. Loaders then transport the ore to an underground crusher, and shafts convey the ore from the crusher for processing.
In the crusher, the ore is broken into smaller pieces of less than 25 centimetres in diameter. Crushed ore is then loaded on to a conveyor belt which takes it to the concentrator. In the concentrator, semi-autogenous and ball mills grind the ore until it is a fine powder.
Ground ore is then mixed with water, chemicals and air in flotation cells, which causes the copper-bearing minerals to stick to air bubbles in the cells. The bubbles float to the surface of the mixture and are collected as liquid concentrate which contains about 27 per cent copper.
Smelting and refining copper
Copper concentrate is pumped to a smelter where it is dried in a large rotating dryer before it is sent into a flash smelting furnace. In the furnace, the concentrate is broken down into three products: gases (containing sulphur), slag (solid waste material containing silica and iron) and copper matte, which is 70 per cent copper.
Once cooled, the copper matte is ground and fed into a flash converting furnace to remove most of the remaining impurities, resulting in a molten copper, called blister, which is about 98 per cent copper. Further refining occurs in furnaces before the copper is cast into large, thick plates called anodes. Each anode weighs in the vicinity of 315 kilograms and contains about 99.6 per cent copper.
At the refinery, racks of anodes are submerged into an acid solution which is interleaved with stainless steel cathodes. Over 10 days, an electric current is sent between the anodes and cathodes, causing copper ions to migrate from the anode to the cathode. Impurities such as gold and silver fall off the anode into the solution. This process produces a plate on the cathode that is 99.99 per cent pure copper.
An anode will usually produce two cathodes, each weighing about 127 kilograms. These are stripped from the stainless steel sheets and strapped together into 2300 kilogram bundles for transport.
Copper mining and extraction also results in the extraction of gold, silver and molybdenum.
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