Kieron Kader U67 Copper Market Report Most copper ore is mined or extracted as copper sulfides from large

open pit mines in porphyry copper deposits. In 2005, Chile was the top mine producer of copper with at least one-third world share followed by the USA, Indonesia and Peru. Copper has been used in the last 10,000 years, but more than 95 percent of all copper ever mined and smelted has been extracted since 1900. As with many natural resources, total amount of copper on Earth is vast. However, only a tiny fraction of these reserves is economically viable, given present-day prices and technologies. Copper is a finite resource, but, unlike oil, it is not destroyed and therefore can be recycled. Recycling is a major source of copper in the modern world

Companies in Industry The main companies that are present in the market are: Anaconda Copper Antofagasta PLC Codelco Collectively they hold approximately 68% of the worlds copper production.

Kieron Kader U67 Barriers to Entry and exit Barriers to entry in this market are high, predominantly due to the nature of production of commodities. As more copper sites are found, the chance and ability of any firm finding new sites diminishes. This is especially harder for new firms who have not invested a lot of money into research and development into finding locations where there is likeliness to contain economically viable copper. An industry that produces goods requires raw materials. This leads to buyer-supplier relationships between the industry and the firms that provide the raw materials. Depending on where the power lies, suppliers may be able to exert an influence on the producing industry. Government legislation and land rights are often extremely difficult to secure and harder for new firms to enter. Additional barriers to entry would be high sunk costs in advertising to increase the brand identity and reputation to enter a market. There are also some barriers to exit such as proper closure of the mines, mainly due for health and safety reasons. Some trans-national corporations have been criticised for shortterm depletion of resources and improper phased exit. Product homogeneity and branding The copper product itself is very homogenous. All firms extract the same substance and then sell it on to companies that have very different uses for them such as wiring (approx 92% of copper mined is used), piping, electromagnets, solders, electrical machines and many more. There is branding however through the corporation selling to major firms. Industries require certain orders and volumes and they would trade with the brand and their reputation so they get their reliable supply. Knowledge Knowledge about copper market is imperfect and low. Despite many knowing the general processes involved with finding copper, the trading and ability to locate the mines is relatively unknown. It would be difficult for someone to decide start up a copper production company without having good knowledge about the market. Although the major firms are all known about and information about them could be easily obtained through websites and company reports.

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Prices The copper market has been less prone to the cyclical price fluctuations; this is typical of many commodities. As shown by the graph there has been a large increase from May 2005 Feb 2008. Profit The major firms in this market are globally very major corporations and have in the past gained super-normal profits. New technologies have enabled firms to produce more cheaply, therefore profits would increase and a scarcity of copper mining sites has not yet occurred, therefore there isnt supply led price increase. Efficiency Efficiency tends to try to be productively efficient for production and many firms exploit cheaper labour for mine workers. These larger firms are likely to have accumulated several economies of scale as they have grown a lot in size. Possible Theory
There is little evidence yet of sustainable demand for metals emerging after the recession. The maintaining view is that real demand follow-through in developed economies may not be clear until mid-2010. The Economist.

Given that a few firms hold the vast majority of the copper industry I think that this is an oligopolistic market.