Copper Production Costs Vs. Required Prices

Two-thirds of the world copper produced in 1979 incurred cash costs between $0.35 and $0.89 per lb, averaging $0.62 per lb. North American costs are higher at $0.48, $0.88, and $0.68 per lb, respectively. Variable cash costs are $0.20, $0.58, and $0.39 per lb for the world; $0.29, $0.63, and $0.46 per lb for North America. Cash costs are relevant for comparing existing operations and evaluating market pricing during periods of excess supply. Analysis of full costs of production (cash costs plus income taxes, profit, and non-cash items) becomes relevant in evaluating the incentive price required to develop new production plants. In mid-1979 this cost (incentive price) was about $1.10 per lb; it is expected to approach $2.00 per lb by 1985.