Source: The Economist                           Date: 29 September, 2011

Copper may not be a barometer for the world economy any longer. Once dubbed doctor Copper for its supposed ability to gauge the global economy, copper prices now stand high and will likely stay there thanks to China, reported the source. Copper is an important copper to Mongolia and its Oyu Tolgoi project will be an important source of copper to China.Copper's jumps and stumbles in price is believed to correlate with shifts in the world economy because how closely it is connected with commodities. An excellent conductor of electricity and heat, copper is used for cables and pipes throughout the world. An average car contains of 25 kilograms of copper, and electronic hardware uses copper for wiring and contacts. Thus, rising demand should provide some indication that manufacturing and construction is on the rise as well.However, the base metal is now apparently less tied to the global economy than China's growth. China consumers at least 40 percent (some guess as high as 50 percent) of global output of around 16 million tons in 2010. The source estimates global demand to rise by more than 40 percent to 27 million tons by 2020.Copper production will not grow much either. Only a few new, large copper deposits currently exist. The largest production of copper comes from Chile at its Escondida project, peaking at around 1.5 million tons in 2007. Mongolia's Oyu Tolgoi is the only other project that comes close to that kind of production but may produce only about half that amount. New supply will depend increasingly on smaller mines extracted from deeper underground and of a lesser grade product. Extracting copper from existing mines will likely suffer the same fate because copper production methods generally extract the best minerals at the beginning of production.Copper does not have many substitutes, either. Aluminum can sometimes be used, but it requires a lot more of it for the same effect. Several accidents where U.S. homes with aluminum burned down in the 1970s because of sparks from poorly connected wirings resulted in the ban of its use by building codes. The volume needed counts it out for the various gadgets that seem to be shrinking each year.In the short-term, copper may fall due to slow growth in the United States and Europe. However, over the long-term, high prices are a permanent fixture, analysts believe.