BHP Billiton and Rio Tinto: the new players in the copper market

by Ina King (Potgieter)

After years of success in the iron ore market, BHP Billiton and Rio Tinto (in both separate and joint ventures) have shifted their focus to the copper industry. The industry, an investor’s haven with the global market valued at $140 billion USD, is expected to have a worldwide surplus of over 300 000 tons in 2015 [according to Australia's Bureau of Resource and Energy Economics].

Rio Tinto's copper division head, Jean-Sebastien Jacques, recently told investors that a shift back to a deficit in the market will unlikely be before 2018 and that the company is now striving to "gain a clear advantage" against competitors and "build a business model that creates value through the economic cycles.”

BHP Billiton foresees copper usage growing sharply in the next decade, partly on the back of a shift to renewable energy sources requiring copper-intensive apparatus. "The market has been generally cautious for 2015/16, but beyond that, most are comfortable with the long-term story," said UBS commodities analyst Daniel Morgan.

While it is unlikely Rio Tinto and BHP Billiton will hold the same degree of dominance over copper that they do in iron ore – for the foreseeable future Codelco, Glencore Xstrata and Freeport McMoran will remain bigger producers – their influence on global copper supply will be greatly enhanced.

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