Take physic, pomp

King of Copper? The flip side of Juan Villarzú’s recent interview

Gloucester: The trick of that voice I do well remember; Is’t not the King?
Lear: Ay, every inch a king!

Shakespeare, King Lear, Act 4, scene 6

Today, when the third different reader mailed me with the link to an interview with “The King of Copper” featuring ex-Codelco headman Juan Villarzú pumping the metal to $2.00 or $2.50 or $3.00 per pound (I’m still not sure which one really is his target), the slightly annoying BS being served up for the masses just got under my skin once too often. Here we go with the antidote:
  • The interview in question was conducted by a certain Andrew Mickey of Q1 publishing (and you’re not alone, as I’ve never heard of the dude or his company, either).
  • Mr. Mickey interviews Villarzú, the chairman of Apoquindo Minerals (AQM.v) and ex-head of Codelco.
  • AQM.v is a junior copper miner in Chile, so has everything to gain from a higher copper price. Mr. Mickey discloses that he is long AQM.v.
  • However, Mr. Mickey also writes that SQM is a “leading copper producer” and waxes lyrical about how it has benefitted from the recent Cu rebound. This is strange, as SQM is the well-known and very large Chilean potash/iodine/lithium company. Not copper. Not even close to copper.
  • Meanwhile, in the interview itself Villarzú informs us of his call for copper. JV says, “I think copper will be at $2 by the end of the year, and will be above $2 next year. Villarzu then goes on at length about China demand for copper as the reasons behind his bullishness. Of course, all this is immediately turned into some type of gospel, because Villarzú is “The King Of Copper” and (in the words of Andrew Mickey) “…has an impressive track record many mining executives would envy.”
  • Today, this press release hits the wires from Kin Communications that repeats in big bold letters that; “I think copper will be at $2 by the end of the year, and will be above $2 next year.” says Juan Villarzu, Former President and CEO of CODELCO Chile, world’s largest copper producer. Kin Communications is the investor relations people for Apoquindo Minerals, by the way, but don’t let that worry you.
Well, it’s good to know what Villarzú thinks of copper going forward isn’t it? Personally I find it a vital piece of information, because when it comes to predicting the price of copper the dude has FREAKIN’ AMAZING TRACK RECORD AS A CONTRARY INDICATOR.
  • For example, in October 2005 he said that copper prices would drop to U$1.25/lb in 2006. It zoomed to way over $3/lb.
  • In February 2006 with copper over $2.30/lb, he called for it to drop to $1.50 to $1.70/lb in 2006, citing Chinese demand reasons. Copper finished the year averaging $3.06/lb. Oops, not the right call when you’re the CEO of the biggest copper company in the world, is it?
  • It was at the same time as these calls that Villarzú “was allowed to step down” at Codelco, being replaced by José Pablo Arellano. Strange coincidence that, isn’t it?
Please don’t get me wrong, though. I’m not saying that Villarzú is a dummy at copper. He was Pres&CEO of Codelco for nine years and saw the company make significant productivity advances. He was once chairman of the ICA (Intl Copper Assoc) and in his time was even a senior economist at the World Bank.

All I’m saying is that it sucks being named “King of Copper” by a paid hack who owns stock in Villarzú’s junior copper company but clearly doesn’t know Jack about the copper industry.

Then getting this obviously biased and uninformed puff-piece stuffed in my face from the same company’s IR dep’t and a bunch of people who should turn their own bullshit alarms on sometimes really sucks.

And Juan Villarzú’s track record in calling spot copper really, really sucks.


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