In a January 29 article – click here – Freeport-McMoran Copper & Gold Inc. (CNI) is reported as saying in its Q408 Conference Call (paraphrased):  “We will have reduced volumes of copper sales and molybdenum sales in 2009, 2010 compared with where we were at the end of third quarter (of 2008)”.

The article goes on to report that Freeport’s copper prices fell by 50% during the quarter, that it cut production and costs., but expects copper will be a source of growth as it responds to global economic conditions and the continued development of infrastructure in China and elsewhere around the world.  Freeport is reported as saying the industry is challenged to find new supplies of copper, that copper produced from existing mines is being limited by (among other factors) falling grades and operational issues, and that “clearly China is going to be the key factor near term in terms of copper markets. And they’re doing activities within their country that’s going to consume copper.”

I have long thought as I saw the current economic condition coming that China was a principal key to near and longer-term base metal prices.  I continue to think that.  I have stayed away from investments in base metals and base metal companies for the past 24 months – with the exception of one small base metal explorer I consider particularly well positioned in what I consider to be a good geo-political environment.  That company has large high grade, good metallurgy, and expanding Resources and Reserves.  I fully expect this investment to provide me with good returns in time, but have simply ‘parked it’ and think of it for the time being as at least a 3 – 5 year (or longer) hold.  My thinking as to when that investment may mature has to do with my own intuitive time horizon for world economic recovery and in particular for what I see as a long-term shift by China from dependence on the U.S. consumer to sustainable self-dependence.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. No check of data underlying articles or comments referenced herein has been made, and no responsibility is taken for them.  See Legal Disclaimer.

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