Why base metals

Our business model focuses on base metals, primarily copper, which we continue to believe is a very attractive business over the long term.

As populations and industries grow, so does the demand for copper, and the pace of industrialization, especially in China and India, has kept global demand for copper high over the last several years.

2008, however, was a different story. Metal prices and the demand for commodities remained high in the first half of the year, but there were dramatic declines over the remainder of the year following the global financial crisis, the tightening of credit and the ensuing global economic downturn. Capital markets were affected worldwide, and the Canadian dollar weakened. While the timing of any potential recovery is uncertain, economic stimulus initiatives and the fundamental development of populations and economies should restore demand for commodities and help our markets to recover.

We also see limitations to the rate of growth in copper production. The supply of new copper production is expected to come mainly from large deposits. Developing them successfully will require significant investment and resources to deal with lengthy permitting and challenging community engagement processes. This bodes very well for the price of copper in the future, particularly since several copper projects have been cancelled or delayed in response to the downturn in the markets, making it even more uncertain whether the supply of copper will meet growing global demand over the next five to 10 years.

We believe it is prudent to remain focused on copper as we are confident that copper prices will recover – the question is how quickly. Fortunately, we have low cost operations, which means we can continue to operate and prepare for the future by advancing the Cobre Panamá project, so we should be in an excellent position to benefit when copper prices rise.metals play an important role in the global economy because of their wide use.