Expert: Mike Fulcher - 6/21/2006

Question
Why are copper cathodes produced at the mine sites and shipped round the world, while copper tubing is produced locally and not shipped round the world?

Answer
CY

This is a bit outside my specific expertise, but I'll give you my thoughts and let you decide for yourself.

I think the answer to your question has to do with the bulk raw material value compared to the costs to transport it.  Copper refiners don't dig ore in one location then ship it long distances for refining, because the bulk worth of the ore is small given that it's mostly waste rock.  These economics of transport have driven the copper refining industry to change from the traditional smelting/concentrating operations that involved moving large amounts of solids through the process stream, to the electrowinning process, which allows you to pile your ore in one location and concentrate copper in a liquid solution through acid leaching.  This change represented a huge cost savings for the industry, and also led to a refined product of higher purity and thus higher value.  Because the value of the finished copper plates are high (especially compared to what it started as), shipping costs are less of an ecomonic factor.  Currently, copper is roughly $7000 a metric ton.  Given that a semi can haul roughly 60000 lbs, or say 30 metric tons, that would put a full load at roughly $210000.  So if you're buying a load of copper plates to make tubing, and it costs $2000 to ship it to you it's not such a big deal, since you spent a lot more than that for the copper plates.

I hope this helps.  If you'd like to dicuss it further just let me know.