Johannesburg — THE high copper price and its subsequent positive effects on related industries have assisted some South African companies to emerge from hard times.

Bell Equipment, which posted a net loss of R372m for the financial year to March, said the increase in the copper price, and the resultant surge in mining, meant a major increase in the use of its materials-handling equipment. The company is operating in the Democratic Republic of Congo.

CEO Gary Bell said that the copper mining sector provided "growth and long-term stability" for the company. The downturn saw Bell's revenue fall by more than half in the year to December, from R5,46bn in 2008 to R2,7bn last year. It posted a net loss of R372m, from a profit of R514m.

"As the copper price is the lead indicator of economic recovery, it is safe to say that those companies experiencing the benefits of the high price are also recovering," said Econometrix Treasury Management MD George Glynos yesterday.

Copper production increased due to demand from China, which consumes 45% of the world's copper.

South African companies working in the Copper Belt in the Congo and Zambia benefited from this consumption as these African countries were important copper suppliers. This was owing to the low reserves of copper in large producing countries such as Chile, Peru and the US.

While SA's heavy equipment suppliers to mines would feel the positive effects of a high copper price, other South African companies, especially those focusing on electronics and electrical equipment, suffered. These included electrical engineering company Reunert. "When the copper price increased, the rand increased, which puts manufacturing firms at risk," said CEO Gerrit Pretorius.

The global copper price hit a high of 7900 a ton in April, and although the price had softened this quarter, it was expected to remain high for the next few years, said a mining analyst.

However, the analyst warned that copper was a volatile commodity, with prices anticipated to come down again in 2013. The analyst speculated that the demand from Western Europe and the US would start to slow in the next few years owing to a decline in infrastructure development.

Meanwhile, apart from the buoyant copper price, the industrial metals sector is expected to stay on a recovery path this year. Demand for such metals was expected to be stimulated by lean producer inventories, government stimulus programmes and Chinese consumption, analysts said. Global economic growth is starting to pick up as a result.

BMO Capital Markets global commodity strategist Bart Melek said that global industrial production was recovering from a 12,5% decline last year to a 3,2% rise this year.

With Reuters