SANTIAGO - Rio Tinto Plc's copper unit chief said it's "hard to imagine" a decline in prices for the metal as limited supplies from mines exacerbate a shortage next year.
"From a supply point of view, there are just not a lot of new stories out there," Andrew Harding, head of the business, said on Tuesday. "It would be hard to imagine what would cause a collapse in the copper price," he said, declining to give a forecast.
Rio Tinto is expanding mines in Chile, Indonesia and Mongolia as China, the world's biggest buyer of copper, boosts purchases of the metal used in cables and electric wire. Supply and demand will be "in balance" in 2010, with a shortage coming in 2011 as the United States and European demand also rises, he said.
Copper climbed to a 20-month high on Wednesday on Chinese demand and as investors bought futures to hedge against a weaker dollar. The price more than doubled last year as the economy recovered from the first global recession since World War II.
Prices may continue to gain on a lack of investment in new mines, said Bart Melek, a commodity strategist at BMO Capital Markets.
"The corporate world is coming around to the idea that this is going to be a long-term stable market," Melek said.
The rise in copper prices comes as executives and bankers meet this week at the World Copper Conference in Santiago. The conference is organized by London-based consultant CRU.
Copper futures for May delivery fell 1.45 cents, or 0.4 percent, to $3.617 a pound on the Comex in New York. Earlier, the price touched $3.6385, the highest level for a most-active contract since Aug 1, 2008.
Harding said he is "very confident" Rio Tinto will start the $4 billion Oyu Tolgoi copper project in Mongolia in 2013, after securing a permit to develop the mine at the end of March.
The new mine will take five years to reach full capacity of 450,000 metric tons of copper a year, Rio said in a March 31 statement.
Mongolia's government owns 34 percent of the project, while Ivanhoe Mines Ltd holds the rest. Rio will have an indirect stake in the project through its holdings in Ivanhoe.
Overall metals demand will double in the next 15 to 20 years, fueled by China, Rio Chief Economist Vivek Tulpule said in a presentation posted on the company's website on Wednesday.