LONDON (Reuters) – Copper bulls who are betting on labor strife this year due to a full calendar of contract talks may be disappointed if early wage deals at two copper mines are a signpost for further agreements with mine workers.
Benchmark copper prices rallied 12 percent in December, partly due to fear of shortages if workers go on strike since many major operations in top producers Chile and Peru have contacts expiring this year, including at top mine Escondida.
Chile’s state-owned Codelco said late last month it had struck a contract deal with workers at its Andina copper mine, while workers at the Lomas Bayas mine accepted a contract offer from operator Glencore Plc early in January.
“The risk of disappointment is probably as big as the risk of it (strikes) coming to fruition because just take a look at what happened last year,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“We had some quite significant disruptions and the price did not actually move that much at the time.”
The world’s biggest copper mine, Chile’s Escondida, was hit by a six-week strike last year, pushing down output at the operation by 7.8 percent to 903,000 tonnes in 2017.