LONDON, Feb 9 The copper market is facing the imminent prospect of the simultaneous closure of the world’s two largest copper mines. Strike action is due to start today at the largest, the Escondida mine in Chile.
There seems little prospect of a last-minute settlement between unions and the mine’s majority owner and operator BHP Billiton. The union didn’t even bother attending talks on the fifth day of statutory government mediation and the company has started shutting down operations.
In Indonesia, meanwhile, Freeport McMoRan is threatening to partly suspend operations at its Grasberg mine due to the lack of an export permit, the latest turn in the long-running stand-off between the company and the Indonesian government.
At risk is combined production of around 1.7 million tonnes, equivalent to around eight percent of global output last year. The potential for lost production from one or both may be partly priced into the market, which is currently trading around $5,870 per tonne in London. Fund money has been steadily accumulating since copper’s big upside move from below $5,000 last November.
But with copper’s notoriously unpredictable supply already back in full focus this year, how well prepared is the market for significant production losses?
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