Copper Continues to Rise as Supply Issues Spread
14 February 2017 - 11:12PM
Dow Jones News
By Katherine Dunn and Sara Schonhardt
LONDON--Copper prices inched to a 20-month high for the second
day in a row on Tuesday, as cuts to production at an Indonesia mine
added to supply headaches amid a strike at the Escondida mine in
northern Chile.
The three-month London Metal Exchange copper price rose by 0.42%
to $6,153 per metric ton in midmorning European trading, the
highest price since late May 2015.
On Tuesday, a spokesman for mining giant Freeport-McMoRan Inc.
in Indonesia said its Grasberg mine stopped production of copper
concentrate last Friday because the company had yet to receive an
export license for the mine.
The company would resume production in early March, but at a
slower pace, if it has still not received the license, said
Freeport Indonesia spokesman Riza Pratama.
"If this prolongs...we will cut operations to just 40% to
accommodate smelting [capacity]," Mr. Pratama said.
Freeport has said it would cut output from the mine by
mid-February if it didn't receive the license from the government,
following new mining regulations introduced in January. On Monday,
the Indonesian government clarified those regulations, including
announcing the new tax rate, as part of a policy to keep more
processing inside the country.
The supply pinch in Indonesia comes amid a strike at the
Escondida mine in the Atacama Desert in northern Chile, the world's
largest copper mine, which began last Thursday. The mine is
majority-owned by BHP Billiton Ltd.
While it is rare for two large mines to have supply problems
simultaneously, the Escondida dispute is less likely to be resolved
quickly than the question of Grasberg's license, said Warren
Patterson, a commodities strategist at ING in Amsterdam.
"That situation could be resolved in the next few days, whereas
the Escondida situation could be a drawn-out process," he said.
The chances that there will be a resolution to the strike in the
next few days are "pretty slim" Mr. Patterson said, and could spur
further labor disputes in Chile as the year goes on.
Nickel was also rallying on Tuesday to a seven-week high, after
the Philippines' department of environment and natural resources
reaffirmed plans to close and suspend a large number of nickel
mines for allegedly violating environmental regulations. On
Tuesday, the Chamber of Mines of the Philippines condemned the
move.
Nickel was up 1.22% at $10,815 a metric ton on Tuesday.
The other base metals were also higher. Aluminum was up 1.66% at
$1,902 per ton, lead was up 0.41% at $2,431 per ton, zinc was up
1.13% at $2,947 per ton, and tin was up 0.53% at $19,875 per
ton.
Write to Katherine Dunn at katherine.dunn@wsj.com and Sara
Schonhardt at sara.schonhardt@wsj.com.
(END) Dow Jones Newswires
February 14, 2017 06:57 ET (11:57 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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