Chinese demand for copper is likely to improve in the second half, the head of Xstrata's copper unit said on Tuesday, as the miner pledged to lift output by about 60 percent over three years after some rivals have put the brakes on expansion.
Charlie Sartain said the company had earmarked roughly $7 billion to beef up its copper division, mainly in Chile, Peru and Argentina, and also in Australia.
"We typicsilica sand acid treatment equipmentally see a cyclical return to demand in the second half of the year in China. We still have a view that the first half was always going to be slower from a copper demand point of view," he told a Latin American investment conference in Sydney.
Recent data from China, the world's top consumer of base metals, iron ore and coal, show its economy is cooling at a faster-than-expected pace prompting its premier, Wen Jiabao, to call on Sunday for new measures that would bolster growth.
"From a market point of view, Europe is relevant, but not a major copper consumer. We have factored in very flat market conditions in Europe. We see some improving economic conditions in the U.S. and that is from the perspective of copper consumption there," Sartain added.
"We have an active growth plan to grow our copper production by 60 percent from projects already in our pipeline," he said.
Xstrata sells 30-40 percent of its copper to China, its largest customer.
His comments come after some miners have sounded a cautious note on expansion.
Slumping commodity prices and escalating costs, particularly in Australia, have squeezed cash flows, pushing BHP Billiton to join rival Rio Tinto reconsidering the pace of their long-term expansion.
BHP, the world's biggest miner, put the brakes on an $80 billion plan to grow its iron ore, copper and energy operations.
Australia has more than $400 billion in resource projects planned or in progress and mining contractors say demand for projects remained strong.
"We're still seeing a nice healthy addressable market going forward," Hamish Tyrwhitt, the chief executive of Leighton Holdings, Australia's top contractor, told reporters.
Any delays in new projects may actually make the heavy load of projects it is tendering for more manageable, he added.
"We have A$30 billion ($29.57 billion)of tenders we're undertaking and over A$8 billion where we're in a preferred position," Tyrwhitt said, adding Leighton preferred to have capital expenditures spaced out.
Indicating the stress facing commodities markets, Chinese buyers are deferring or have defaulted on coal and iron ore deliveries following a drop in prices, traders said.
VALE SELLING ALL IT PRODUCES
But some miners continue to see a strong outlook and the world's largest iron ore miner, Brazil's Vale, said on Monday it was selling iron ore about as fast as it could mine it, despite China's slowdown.
"We don't have any problem concerning orders, we continue to sell all the amounts the company is producing. The scenario we see continues positive," Vale investor relations chief Viktor Moszkowicz said at an investment seminar in Rio de Janeiro.
At the same seminar, though, Brazilian steelmaker Usiminas said it was scaling back plans to expand its own iron ore mining operations.
Xstrata is the world's fourth-largest copper miner, producing 889,000 tonnes of copper in concentrate and 651,000 tonnes of copper cathode last year.
Copper prices are down some 10 percent since April, weighed down by economic uncertainty in Europe and China compounded by mounting unsold inventories.
Xstrata has forecast a dip in first-half copper output as its Collahuasi Mine in Chile, a joint venture with Anglo American, faces declining ore grades, before picking up in the second part of 2012.
