We have been going inside the copper mining industry through former post (larger open pit mines, copper mines, countries source of the natural resource & mining companies). enlazar con todos los posts. During this path we have learned that there are some (not too many) countries in which copper is hold and that there are some (not too many) companies who are in charge to extract and to commercialize the natural resource.
It is starting to be a bit tricky to understand the real role of every player at the copper mining industry. The fact is that mines, as natural resources (copper) sources, are in the middle of countries and enterprises. Countries have the resource and companies exploit them as you can see in the graph.
Left: countries; Middle: mines; Right: companies. Source: Jose Subero, http://city-lines.com
As mines are part of different countries it is possible to simplify the graph just taking them out of the graph. This will take us to a graph in which companies and countries are face to face and where it is possible to see the relation between them.
Left: countries; Right: companies. Source: Jose Subero, http://city-lines.com
This graph shows how important are the relations between countries and companies and how they play some kind of global game around the copper extraction business. It is easy to understand how Chile, China & Peru or Codelco, GlencoreXstrata & FCX have to be players who are able to influence the global copper market.
But I think that for a better understanding of the copper mining industry it is possible to make another simplification. As there are not too many enterprises as significant players we can assume that those companies are supported by their own governments (as an example we are assuming that CODELCO is supported by Chile and that FCX is supported by the USA in the international markets). So we can assume that companies can be represented by their nationality to develop an Index to measure the Country-Influence in copper extraction activity. You can see the companies’ origin in the following table:
|ENTERPRISES||COUNTRY OF ORIGIN|
|Freeport-McMoRan Copper & Gold Inc. (FCX)||USA|
|Jiangxi Copper Company||China|
|Mitsubishi-JX Nippon Mining&Metals||Japan|
|China Molybdenum Co Ltd’s, CMOC||China|
Assuming that the place where the mineral is extracted weights 50% and the origin of the mining enterprises weights another 50%, we can create an Index that represents the performance of the different territories in the copper extraction industry. The Index is based on the production of copper, so if we divide the Index with the total Tons of world copper production we can create a normalized Index as follows:
|COUNTRY-INFLUENCE||COUNTRIES INDEX||COMPANIES INDEX||INDEX||NORMALIZED INDEX|
|Democratic Republic of Congo||485.000||485.000||2,66|
Source: Jose Subero, http://city-lines.com
As you can see from the table above, there is a 27,64% of Index that haven’t been specified because a lack of information of the project, but it is interesting to see some aspects as the strength position of Chile or the emergence of the UK in the index, a country with no copper resources in its land. It is interesting, as you can see in the figures that follows that there are countries that have influence because the resource (as Peru), the enterprises (UK) or both (Chile)
X:Country-Index; Y:Enterprises-Index; Size of circles:Global-Index; Source: Jose Subero, http://city-lines.com
X:Country-Index; Y:Enterprises-Index; Size of circles:Global-Index (detailed index); Source: Jose Subero, http://city-lines.com