JAKARTA – Disruptions at the world’s two biggest copper mines by strikes and other issues this week are threatening to reduce global supplies of the metal, pushing benchmark prices back towards their highest levels for the year so far.
BHP Billiton said it would halt output in Chile at its Escondida mine, the biggest copper producer, during a strike to begin on Thursday. Freeport-McMoRan Inc warned it will scale back output at its Grasberg mine in Indonesia, the second-biggest, amid a smelter strike and issues over renewal of its mining permit.
Three-month copper on the London Metal Exchange gained more than 2 percent during trading on Wednesday to $5,925 a ton on the supply threat, with analysts noting they had already been expecting tighter supplies this year. [MET/L]
Standard Chartered estimated that more than 5,000 tonnes of copper production would be lost each day that both BHP and Freeport were curtailing or halting output at their mines.
In Indonesia, a strike at the country’s biggest copper smelter, which is Freeport’s sole domestic offtaker of copper concentrate, has added to the company’s woes. Freeport had warned last week it could be forced to cut staff and production at Grasberg if it did not get a new export permit by mid-February.
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