Lundin Mining announced that their major new copper mine, Tenke Fugurami, schedule has slipped. Here's the story and here's the wording: "Production start-up, however, will be slightly behind the initial schedule of 4th quarter 2008, due to delays in construction works. Construction and start-up of production will now extend into 2009."
I've worked on many a project and have seen many a manager announce a slip. The wording generally used is intended to make the slip seems as small and painless as possible even if it means less than complete candor. This wording is right up there with the best. "will now extend into 2009" sounds like a one to three month slip, but could be a one to twelve month slip. I'm guessing its more in the middle, say six months.
Now, how big is the project in the overall scheme of things? Again quoting: "the mine’s first phase will provide annual production of 115,000 tonnes of copper cathode". Worldwide production of copper is approximately (see my earlier post) 15 million tonnes/year. That means that somewhere are around .4% (at a six months slip) of world supply disappeared. Doesn't seem like much, but this kind of thing adds up and the price of Lead (Pb) went ballistic this year on just a 3% shortfall in mine output.
Most analysts seem to total up new projects (mines) scheduled to come online to come up with their supply growth estimates. They don't factor in late projects or older projects depleting or closing. One of the bullish analysts, Bloomsbury, did recently say, when predicting $4+ copper, their bullishness was based on such items as unforeseen production delays. This may account for why they have a reputation of both being more bullish and having had a better track record than their peers.
Tenke is a perfect example of an "unforseen production delay". Let me know if you hear of any others.