Tuesday, July 6, 2010

Freeport (NYSE:FCX), BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK), Rio Tinto (NYSE:RTP) Will Get Boost from Increasing Copper Prices

Mining companies like Freeport-McMoRan (NYSE:FCX), BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK) and Rio Tinto (NYSE:RTP), and others with significant exposure to copper will benefit in the long term, as it's expected for demand to increase and supply to dwindle in the years ahead.

There's no doubt copper prices will remain under pressure in the near term, and there's no way of knowing when that will start to change.

But the pent-up demand for copper is still there, and when the global economy and specific economies of countries begin to rebound, copper prices will surge on the built up demand.

Much of this is based on the quality of ore being found by the miners, which has been of a lower quality. That ultimately will lead to higher copper prices because companies will have to go deeper to find higher quality copper deposits, which will require larger inputs or higher costs.

That should put the miners in a stronger position, which will allow them to increase margins. The higher costs of copper would mean nothing if the margins to get it aren't improved.

But the demand will definitely be there, and that should produce both higher copper margins, profits and prices.

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