Harry (and others) ...... for all the truth in newspaper article etc, be wary of getting too greedy (yes, we've all done it) and don't chase any old mining company just because it just might be a t/o target ..... in conclusion, buy on fundamentals with any potential t/o as a bonus, and it would do no harm to put in place trailing stops.

Thanks C, and noted by many of us i should think.

the big Q is what to do tomorrow if anything .... lol!

Depends on peoples strategies as always.

Times Online July 31, 2006

Need to Know

Vedanta Resources, the miner, is to hold its annual meeting on Wednesday. Its first-quarter results, reported two weeks ago, showed revenue up 113 per cent to 1.3 billion.


Xstrata, the Swiss-based and London-listed mining group, is planning a rights issue of up to 2.75 billion to finance its acquisition of Falconbridge, the Canadian nickel and copper group. The way was cleared for Xstratas 10.8 billion bid to succeed when Inco, its Canadian rival, withdrew its offer on Friday. (The Sunday Telegraph)


Rio Tinto, the Anglo- Australian mining giant, which recently reported a 4 per cent rise in first-half iron ore production, is to report its first-half results on Thursday.

Copper Futures Rise as Prospect of Escondida Srtike Stokes Supply Concern

July 31 (Bloomberg) -- Copper prices rose amid concern Chile's Escondida mine, the world's biggest copper producer, will be shut by a strike next week, squeezing global supply.

Workers voted to stop work at the mine operated by BHP Billiton on Aug. 7, based on a tally of more than half of votes cast on July 28, Pedro Marin, a spokesman for the Escondida Workers' Union No. 1, said. Miners want wages to rise by 13 percentage points above the inflation rate, while management has offered 1.5 points above inflation.

``It looks like it's hard to avoid a strike as the difference between the union and management is too big,'' Cai Luoyi, a metal analyst at China International Futures (Shanghai) Co., said by phone.

Copper for three-month delivery rose as much as $133, or 1.7 percent, to $7,803 a metric ton on the London Metal Exchange. It traded at $7,790 at 8:24 a.m. London time, posting a 10.7 percent gain in the past six days.

Metal for delivery in October rose 2,530 yuan, or 3.9 percent, to settle at 67,640 yuan ($8,491) a ton on the Shanghai Futures Exchange when trading ended at 3:00 p.m. local time. It earlier rose by the daily allowable maximum gain of 4 percent.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, rose as much as 4.7 percent to 67,780 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Escondida accounted for 8.5 percent of copper mined worldwide last year. BHP Billiton owns 57.5 percent of the mine, Rio Tinto Group owns 30 percent and a group led by Mitsubishi Corp. owns 10 percent. The International Finance Corp. owns the rest.

Supply Shortfall

Demand will exceed production by about 200,000 tons this year, unchanged from last year, UBS AG, Europe's largest bank by assets, said in a July 27 report. There has been a shortfall since 2003, according to UBS. The price of copper, used to make pipes and wires, has more than doubled in the past year.

Inventories monitored by exchanges in London, Shanghai and New York fell 4.7 percent to a seven-month low of 155,350 tons this month, data compiled by Bloomberg News shows.

``A prolonged strike is likely to affect refined production, and aggravate the tight copper supply in China,'' Li Rong, a metal analyst at Great Wall Futures Corp., said by phone from Shanghai.

Stockpiles monitored by the Shanghai Futures Exchange fell to an eight-week low last week.

Source: Dow Jones - 31 July 2006

Supply jitters push LME copper to two-week high: LME


London Metal Exchange three-month copper benefited from supply-side jitters Monday, moving higher on the strength of the strike vote by Escondida copper mine workers late Friday.

Copper moved to a two-week high of $7,980 a metric ton towards the end of Monday's session, closing just shy of that level at $7,949/ton at late PM kerb in London.

"Even though a strike vote at Escondida had been broadly expected, the unanimous nature of the outcome with 97% in favor of strike actions prompted buying nevertheless," said Roy Carson, analyst at Triland Metals Ltd.

Apart from news of the strike vote, the base metals market was also digesting news that Mexican mining giant Grupo Mexico SA may be mulling a play for Phelps Dodge Corp., as reported by The Globe and Mail newspaper, Monday.

The article cited "sources" but didn't identify them, saying only Phelps aims to take over Canadian nickel miner Inco Ltd. after plans for a three-way combination with Falconbridge Ltd. fell through.

The remainder of the complex also moved higher on the strength of copper's gains with zinc recording the strongest intra-day gains, up 3.6% on Friday's PM kerb price at $3,415/ton.

Nickel also gained, rising $795 to $25,495/ton at PM kerb, buoyed by a continuation of the seasonal pattern of LME warehouse stock drawdowns and rising canceled warrants. LME warehouse stocks of nickel fell 4,128 tons Monday, while canceled warrants rose to 67%.

Aluminium prices breached nearby resistance at $2,550/ton during the afternoon session, moving higher still to close at $2,565/ton at late kerb, mainly on the strength of short-covering, according to Triland.

Well worth reading the long article in today's Telegraph re Xstrata ...... MD talks openly about the huge escalation of production costs and their effect on profitability, especially if there is a dip in commodity prices ..... That said he remains very bullish about nickel (see bid for Falconbridge!) and zinc.

Will now start thread for ENK which I think may well prove to be a profitable nickel mining investment.

Thanks for that C, on the point about zinc i think VED have plenty of that -);

yes they do ..... and from memory they also commented on the heavy adverse effect of escalating production costs

With VED having said that it means that the news is in the public domain, therefore by definition in the price. The only concern i have is, on what basis are they escalating? if it's wages+ conditions then i think that can be managed.

Refining/smelting or whatever is the correct term, assuredly uses HUGE volumes of "energy" .... and we all know what has happened with oil and gas prices

BBC - 3 Aug 2006

Largest copper mine facing strike


The world's largest privately-owned copper mine could see production halted next week, as workers threaten strike action after rejecting a pay offer.

Labour relations at the Escondida mine in Chile have deteriorated as staff hold out for a 13% salary rise and a 16m peso ($16,900; 8,900) bonus.

The mine operators' latest bid had been a pay increase of 3% and a bonus of 8.1m peso, double their previous offer.

Workers said a strike could still be averted at talks late on Thursday.

'Good will'

"If there is real good will to solve this, a strike may be averted," said workers' spokesman Pedro Marin.

Mr Marin said that the latest pay proposal was massively and absolutely rejected by the mine's 2,000 workers.

Should the talks fail on Thursday and Friday then the strike would start on Monday.

The Escondida copper mine is 57.5%-owned by BHP Billiton, while fellow miner Rio Tinto owns 30%. The remaining stock is held by a Japanese-led consortium, with a small stake in the hands of International Finance Corp.

The labour dispute comes as world commodity prices have surged, partly due to a surge in demand for metals and partly as supplies become squeezed.

Analysts said that any disruption to output at Escondida, which is expected to produce 1.4 million tonnes of copper this year, may lead to copper prices rising on the international market.

Aug. 4 (Bloomberg)

Copper Leads Gains in Metals on Looming Strike, Lower Dollar


Copper gained the most in four weeks, leading a metals rally on speculation that a looming strike at the world's biggest copper mine will reduce supply and after the dollar fell following a worse-than-expected U.S. jobs report.

Workers at the BHP Billiton mine in Chile, which produced 8.5 percent of the world's copper last year, said they will strike Aug. 7 unless they get a better pay offer. U.S. employers added fewer jobs than expected in July and the unemployment rate climbed, the government said, causing the dollar to fall to a one-month low, making it cheaper to buy dollar-priced metals.

``Any production that's taken offline will have an impact.'' said Jimmy Quinn, a trader at A.G. Edwards Inc. in New York, who also said U.S. jobs data ``plummeted the dollar,'' which caused metals prices to rise.

Copper for delivery in three months on the London Metal Exchange rose $380, or 5 percent, to $7,870 a metric ton as of 3:27 p.m. local time. The metal was up 2.6 percent for the week, heading for the fifth weekly gain in six weeks.

On the Comex division of the New York Mercantile Exchange, copper for delivery in September gained 12.6 cents, or 3.6 percent, to $3.615 a pound at 10:29 a.m. local time. In both London and New York, a close at these levels would mark the biggest one-day percentage gain since July 6.

Among other metals for delivery in three months on the LME, nickel gained $1,200 to $25,600 a ton, aluminum added $43 to $2,542, lead rose $18 to $1,135, tin was $150 higher at $8,350 and zinc advanced $142 to $3,462.

The U.S. dollar fell to a one-month low against the euro and dropped versus the yen after a report showing the U.S. added fewer jobs than expected. Employers added 113,000 jobs last month after an increase of 124,000 in June. That was less than the 144,000 projected by the average forecast in a Bloomberg News survey. The jobless rate rose to 4.8 percent.

Copper has risen 79 percent this year in London, and traded at a record $8,800 on May 11. The rally has been supported by labor disputes at mines in Mexico and Chile. Demand will beat output this year by about 200,000 tons, UBS AG forecast in July.



Inventory Gain

Consumers of the metal, such as makers of power cables and pipes for plumbing, may use stockpiled copper to fill the shortfall. Inventory monitored by the LME gained 1.2 percent to 102,825 tons today, the exchange said. The inventory is equal to less than three days of global consumption.

BHP, which is based in Melbourne, needs to close the gap with the labor union's wage demand for a raise that would be 13 percentage points above inflation, union spokesman Pedro Marin said. The company's last offer, made Aug. 2, was 3 percentage points over inflation. Marin said a new offer needs to be made by today at the latest to avoid a strike, because the union needs time to vote.

The planned strike is ``really supporting the market,'' said Neil Buxton, managing director of London-based GFMS Metals Consulting Ltd. ``In bull markets you get more strikes; it's always been the case.''

Copper yesterday fell 4.2 percent in London on speculation interest rate increases by the Bank of England and the European Central Bank will slow economic growth and curb metals demand.

The market was ``overreacting,'' and U.S. interest rates are of greater importance, Buxton said. Federal Reserve policy makers will meet Aug. 8 to decide on the benchmark overnight lending rate between banks.



Futures Forecast

Ten of 15 analysts, investors, traders and consumers surveyed Aug. 2 and yesterday by Bloomberg News said copper will rise next week. Four said it will drop and one forecast little change.

A strike ``will naturally drive the price of copper up to test the highs made in May,'' said Mark Lewon, vice president of operations for Utah Metal Works, a scrap-metal recycler and broker in Salt Lake City.

More wage negotiations are due at mines including Teck Cominco Ltd.'s Highland Valley in Canada. The management at Antamina, a Peruvian mine owned by BHP Billiton and Canada's Falconbridge Ltd., is talking with workers, said mine spokesman Gonzalo Quijandria. Chile's state-owned miner Codelco is due to negotiate with employees later this year.

``Even if there's no strike (at Escondida), and prices lose this source of support, there are the Highland Valley, Antamina, and Codelco labor-contract negotiations still to work through,'' said Andy Cole, a London-based analyst at Metal Bulletin Research. ``There's still plenty of support for prices out there.''

4 Aug 2006 05:25 GMT
DJ FOCUS:Escondida Deadline To Set Course For Copper Prices
By James Attwood and Glenys Sim


SYDNEY (Dow Jones)--A looming deadline for labor negotiations at the world's biggest copper mine could be the trigger for a breakout of the red metal's tightening trading range, analysts and traders said Friday.

While the reaction may not be overly dramatic, "this could be the catalyst for a move that could be with us for a while," said Jonathan Barratt, head of foreign exchange and metals trading at Sydney-based investment firm Tricom Group.

The widely-expected strike at Chile's Escondida mine has largely been factored into copper prices, and the company says it has a contingency plan to maintain output in the event of a strike.

However, market observers maintain confirmation of a strike will lift prices "maybe a few hundred dollars," while an eleventh hour settlement will probably have an even bigger impact on the downside.

While the market's overall direction is unlikely to swing on just one event, low summer volumes and a lack of outlook consensus makes it vulnerable. Chart patterns too suggest copper prices may be ready to break out of their recent range.

"Currently there isn't much news to drive the market - one is the Escondida issue and the other is next week's Fed. rate decision," said Maike Futures executive vice president Haihua Shen.

"It's a very uncertain environment and (they are) very uncertain events," he added.

Unless Escondida management, led by BHP Billiton (BHP), puts a fresh offer on the table by Friday night local time, workers have vowed to start a general strike Monday morning.

If the strike happens, there will be production losses of 25,000 metric tons of copper per week, said analysts at European copper producer and refiner Norddeutsche Affinerie.

The industry fears a strike at Escondida could trigger industrial action at other major mines as workers seek a share of near record prices that are swelling company coffers.

Labor contracts are coming up for renewal at BHP's Antamina mine in Peru as well as mines at Chile state-owned Corporacion Nacional del Cobre de Chile and Falconbridge Ltd.'s (FAL) Altonorte smelter.

"To put the severity of the situation into perspective, some 15%-20% of world production capacity is, or will be, exposed to the threat of labor unrest at some point in the second half of this year," Standard Bank said in a report this week.


Global Growth Concerns In Focus

Meanwhile, global growth concerns have come back into focus after both the European Central Bank and the Bank of England raised lending rates overnight.

Europe's rate rises intensify investor concerns that the U.S. Federal Reserve may follow suit next week and that Beijing's stepped-up efforts to cool growth may go too far and hurt global metal demand.

"Higher interest rates will, in time, slow overall spending growth and that will mean reduced demand for base metals among other things," said Commonwealth Bank of Australia analyst, Tobin Gorey.

After soaring to an all-time high of around $8,800 a ton in mid May as investors reacted to tightening fundamentals, copper plunged nearly 30% over the next month with rising interest rates casting a shadow over global growth prospects.

Since then, the flagship base metal has been consolidating, with prices whipping around a wide range amid low volumes while concerns over U.S. and Chinese industrial demand battle with a string of supply side disruptions.

The London Metal Exchange benchmark contract ended the late kerb Thursday at $7,490/ton.

Analysts note copper's price fluctuations are occurring within an ever tightening range, suggesting the market may be ready for a breakout, which could establish a significant trend for the entire base metals complex.


Technical Turning Point Approaching?

Dow Jones technical analyst David Rogers said a symmetrical triangle formation has emerged in copper's charts, with a rising support line near $7,210 and a falling resistance line near $8,000.

"It's the most significant pattern for a quite some time," Rogers said.

"A break of the July high at $8,200 would suggest an upside break was clearly underway, while a break of the July low at $7,010 would suggest a sustained downside break was unfolding," he said.

In theory, a sustained break of the triangle support or resistance lines, on rising volume, should generate a move equal to the height of the pattern, which is $2,300.

Falling volume during the formation of the pattern increases its significance, Rogers noted.

From a fundamental perspective, a strike confirmation could send prices from current levels at around $7,600/ton towards the psychological $8,000/ton level, said analysts.

As long as next week's Fed decision isn't interpreted as being too much of a growth dampener, copper will likely set its sights on May's all time high, they said.

On the flip side, a strike aversion could lead to a run back to the psychological $7,000 level.

And a break below that could cast a shadow over the sustainability of market's four-year uptrend, analysts said.

World's largest copper mine faces strike threat
Posted: 05 August 2006 0327 hrs


SANTIAGO : Workers at the world's biggest copper mine in Chile threatened to go on strike next week after the collapse of salary negotiations.

The work stoppage at Minera Escondida, which is controlled by Anglo-Australian mining giant BHP Billiton, will start Monday if management fails to make a new offer to the miners, said the union representing 2,000 workers.

"If the company's new offer is not close to our demands, we will not accept it," said union leader Pedro Marin. "We have made our decision with the complete support of our base."

The mine's spokesman, Mauro Valdes, said the company was willing to reach an agreement that is "responsible for both sides."

In its last offer Wednesday, the company proposed a three percent salary increase and a 15,000 dollar bonus to each miner, but the union rejected it as an "insult."

The miners are asking for a 13-percent salary increase and a 30,000 dollar bonus, as the price of copper has nearly quadrupled over the last three years.

Mina Escondida, located in the Atacama desert in northern Chile, produces eight percent of the world's copper.

Its main customers are Japan, Germany, Canada, China, Sweden, Brazil, South Korea and France.

- AFP /ls

dai ...... would appreciate your thoughts ..... it is inevitable that the chilean strike will be settled sooner or later (probably sooner), with the only long term effect being a (significant) increase in the wage bill ...... whether or not that will have a significant impact on profitability (end price of copper), i do not know, but rather doubt it.

as to the price of copper itself, i cannot see any way that it can continue to escalate indefinitely or even much further, without a severe reaction to its price .... imo, this is inevitable and fairly imminent (within 3/6 months) ....... however, that does not mean the end to its increasing demand relative to production capacity; merely a sharp shake up in the producers' sp followed by consolidation and then (hopefully) a sensible and steady recovery.

so, having "done" copper, what is likely to happen to other hard commodity prices such as zinc? ..... i suspect that that price, though historically high, has not reached the giddy relative level of copper, though there will be some follow through if the copper price suddenly tumbles.

gold is, i think, a law unto itself.

To me, metal prices are presently going through a stabilizing process. Once worldwide markets and dealers are conditioned to this then metal prices will begin to take another step forward. I see no way that metals have reached a peak from where they are going to retrace. There are too many forward-driving forces that will sustain increasingly higher metal prices (scarcity, strikes, developing economies).

It's all eyes on the Fed and a possible Mid-East cease-fire this week. If the Fed don't raise rates and somehow a cease-fire can be brokered then imo prices will rise across the board. Who knows what will happen - or when??? If we did then we would all be happy as Larry! That's the name of the game: you pays your money and you makes your choice. Good luck!

Associated Press - August 06, 2006

Chile Copper Mine Workers Set to Strike


SANTIAGO, Chile (AP) - Workers at the world's largest privately owned copper mine will walk off their jobs early Monday after rejecting the company's latest offer for a new contract, union spokesman Pedro Marin said.

"The cards are on the table, we are going to strike," Marin told The Associated Press by telephone Sunday.

He said the stoppage will start with the first work shift Monday morning.

The union representing the company's 2,052 approved the strike after turning down a second, improved contract offer by the company calling for a three percent across the board salary increase and a one-time bonus of U$17,00 (euro13,200).

The union stood by its demand of a 13 percent wage increase and a U$29,000 (euro24,800) bonus.

The strike was approved leaders after final talks late Saturday, ending five days of a government "goodwill mediation" failed to produce an agreement. A general vote on the proposal will still take place.

The company has a "contingency plan" to face the strike, a spokesman, Mauro Valdes, said. He gave no details.

Union spokesman Marin said the plan aims at trying to maintain production "with contractors and outside workers."

Escondida, 1,600 kilometers (995 miles) north of Santiago, produced 1.27 million metric tons of copper last year, or nearly one quarter of Chile's total output. Chile is the world's largest copper exporter.

The Australian-British consortium BHP Billiton PLC controls 57.5 percent stake at of the mine, while Rio Tinto PLC, also Australian-British, holds 30 percent, and Mitsubishi Corp.-led Japanese consortium 10 percent.

Copper Futures Rise as Strike May Start Today as World's Top Mine in Chile

Aug. 7 (Bloomberg) -- Copper futures rose as a looming strike at the world's largest copper mine, due to start at 8 a.m. New York time, stoked concern about supply disruption at a time of robust global demand for the metal.

Workers will walk off the job at Escondida in Chile as part of a protest over wages, Pedro Marin, a spokesman for the Escondida Workers' Union No. 1, said. ``The strike is on,'' said Marin, speaking ten hours ahead of the planned stoppage. Escondida, run by Melbourne-based BHP Billiton, produced 8.5 percent of copper mined worldwide last year.

``With copper at such high price levels, mine unions the world over feel it's a good time to bargain,'' Hu Kaixi, a copper trader at China International Futures Co., said from Shanghai. ``The concern is that supply disruption will probably follow in other mines.''

Copper for three-month delivery on the London Metal Exchange, the world's largest such bourse, gained as much as $170, or 2.2 percent, to trade at $8,030 a metric ton. The contract, reached a record at $8,800 a ton in May, traded at $7,875 a ton at 8:11 a.m. in London.

``Unless the company offers workers a contract with improved terms that the workers accept, a strike looks imminent,'' Kevin Norrish, an analyst at Barclays Capital in London, said in a report dated Aug. 4. A strike will probably paralyze production at Escondida, Norrish said, citing the secretary for the mine union.

The strike won't affect copper output from the mine initially as ore from stockpiles can keep the processing plants running, Emma Meade, spokeswoman at BHP Billiton, said today.

`Output Not Affected'

``Copper output is not affected yet because of stocks and feeding with higher grades, but stripping is delayed and will have an impact in the future,'' Meade said. She wasn't more specific.

Copper for delivery in October rose 2,100 yuan, or 3.1 percent, to settle at 69,710 yuan ($8,748) a ton on the Shanghai Futures Exchange. The contract reached a record 85,550 yuan in May.

Workers at Escondida want wage increases to reflect part of the surge in prices for copper, Marin said from the Chilean city of Antofagasta. The price of copper, which is used in pipes and wires, has more than doubled in the past year.

The Escondida union wants a rise of 13 percentage points above inflation, plus a bonus of 16 million pesos ($29,496) per worker. The union has said its 2,052 members represent about 94 percent of the mine's workers.

BHP has offered Escondida staff a wage rise of 3 percentage points above inflation, bonuses of 8.5 million pesos per worker, and is also pledging to build miners a soccer field.

Rio Tinto, Mitsubishi

BHP Billiton owns 57.5 percent of Escondida, Rio Tinto Plc owns 30 percent and a group led by Mitsubishi Corp. owns 10 percent. The International Finance Corp. owns the rest.

Metal for cash delivery in Changjiang, Shanghai's biggest spot market, rose as much as 3.1 percent to 70,300 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Copper for delivery in September fell 0.25 cents, or 0.1 percent, to $3.63 a pound on the Comex division of the New York Mercantile Exchange at 3:14 p.m. Singapore time in after-hours trade.

Labor problems have flared at other mines. Grupo Mexico SA, the world's seventh-largest copper miner, resolved a strike at its Cananea mine on July 16 after union workers shut it down on June 1.

A union representing workers at Teck Cominco Ltd.'s Highland Valley mine said it'll lead a strike from Oct. 1, halting output at Canada's largest copper mine, unless a new wage deal is agreed.