Production of refined copper should rise 55.6 per cent in 1998/99 to 420,000 tonnes, the Australian Bureau of Agriculture and Resource Economics said in its June quarter report.

The forecast increase for the next financial year (July/June) after an 11.5 per cent drop in 1997/98 was largely due to expansions at WMC Ltd's Olympic Dam project in South Australia state and MIM Holding Ltd's expansion of its Townsville refinery in Queensland state.

Abare said exports of refined copper were expected to jump 91.7 per cent to 230,000 tonnes in 1998/99 from 120,000 tonnes in 1997/98. The June figures also repeated a forecast fall from Abare's March bulletin of about 25 per cent in world copper prices in calendar 1998.

The forecast average world copper price for 1998 was A$1,715 a tonne (US$0.778a pound), down from the 1997 average of US$2,777 a tonne (US$103.3/lb).

Abare forecast a further drop of 0.9 per cent in the copper price in 1999 to US$1,700 a tonne (US$0.771/lb). It noted prices were around US$1,685 (US$0.76/lb) in May.

"This decline principally reflects a return to more negative sentiment about weak and declining copper consumption in some of the major Asian countries and expectations of increased world production," Abare said.

"The average price in 1999 is forecast to fall marginally as production continues to exceed consumption and stocks increase further." Abare said it expected world copper production to grow by about three per cent in calendar 1998 to 11.7 million tonnes.

World copper consumption in 1998 and 1999 was constrained by reduced demand in some Asian countries and the economic downturn in that region. Total Australian export earnings from copper were estimated to be A$1.05 billion in 1997/98 and were expected to rise by about three per cent to A$1.08 billion in1998/99.

This was largely because lower prices were expected to be more than offset by a forecast rise in export volumes of refined metal and a weaker exchange rate. Also the lead mine output is expected to rise by 19.5 per cent in 1998/99 (July-June) to 675,000 tonnes, mainly due to increased production at the Cannington mine in Queensland.

This would follow a rise of about 9.5 per cent in 1997/98 to 565,000 tonnes, again due mainly to production increases at Cannington, owned by The Broken Hill Pty Co Ltd.

However, export earnings were expected to fall 3.6 per cent in 1997/98 to A$450 million from A$467 million the previous year, the Abare said. This fall was mainly because of lower average export returns from refined lead and lead bullion.

This would then be followed by an 18.9 per cent increase in export earnings to A$535 million in 1998/99. Abare said several factors would contribute to the 1998/99 rise, including sharply higher export volumes from Cannington, higher unit export prices because ofthe high silver content of Cannington's concentrates and an assumed lower average exchange rate for the year.

The June figures were revised slightly from March, when output was seen at 570,000 tonnes and exports worth A$439 million in 1997/98. Abare said BHP Co Ltd's Cannington mine, which began concentrate output last October, would increase production is likely to contribute towards its capacity of 175,000 tonnes a year.

Western Metals Ltd's new Pillara zinc-lead mine in Western Australia would also add to increased Australian mine production. World prices for lead in calendar 1998 were forecast to fall 15 per cent to US$533 a tonne (US$0.24 a pound) in calendar 1998 and a further four per cent to US$510 a tonne (US$0.23/lb) in the following year.

The June 1998 forecast was an increase of US$13 a tonne on the March estimated price. World lead metal consumption was forecast to fall one per cent in 1998 to 5.98 million tonnes, reflecting expected falls in some Asian countries and the United States.