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.

DO,

"There are too many forward-driving forces that will sustain increasingly higher metal prices (scarcity, strikes, developing economies)."

Well put, Sort of sum's my feelings up at the moment.

Associated Press - 8 August 2006

Strike begins at copper mine in Chile

Workers at the world's largest privately owned copper mine in northern Chile went on strike Monday to press their demand for better pay, and by midday production was down by 60 percent, a company official reported.

Union spokesman Pedro Marin said workers were gathering at a plaza in Antofagasta, 1,600 kilometers (995 miles) north of Santiago, for a planned march.

Other miners blocked an access road to the mine with rocks and parked buses.

A union assembly was scheduled for late Monday and a vote on the company's contract proposal was likely, Marin said. The proposal was rejected by the union leadership.

The company has called its contract offer, made in government-mediated talks, final. It includes a 3 percent salary increase and one-time bonus of US$17,000 (13,200).

The workers are asking for a 13 percent wage increase and a bonus of US$21,190 (18,400).

There was no immediate comment by the company on Monday's work stoppage but it said earlier that it would implement a "contingency plan." No details of the plan were announced, but Marin said it includes hiring around 1,000 outside workers and contractors to maintain some production.

Around noon Monday, a company spokesman, Mauro Valdes, told the Santiago daily El Mercurio that production had dropped by around 60 percent.

Escondida produces around 3.6 metric tons (4 tons) a day, or around one quarter of Chile's total output. Chile is the world's largest copper exporter.

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

Main markets for the mine's production include Brazil, China, France, Japan and South Korea.

Strike starts at Chile copper mine

By Pav Jordan Mon Aug 7, 2:05 PM ET

SANTIAGO, Chile (Reuters) - Workers drew first blood in their fight with Chile's Escondida copper mine, cutting 60 percent from daily production as they walked off the job to demand a wage and benefits hike from its foreign owners.
ADVERTISEMENT

"Around 60 percent of output," is being affected by the strike, BHP Billiton spokesman Mauro Valdes told Reuters on Monday, hours after the widely anticipated walkout. Workers said the strike cut production by as much as 80 percent.

The mine, the world's largest copper mine, applied an immediate contingency plan to maintain basic output, but Valdes could not say what the effects of a prolonged strike might be.

"Minera Escondida reiterates it desire to maintain dialogue (with workers) and trusts the strike will be carried out in a responsible and legal form," the company said in a statement.

Workers at Escondida, which produces about 20 percent of Chile's copper and accounts for 2.5 percent of the country's gross domestic product, are demanding a new contract to replace a 2003 deal that was signed when copper prices were about a fifth of what they are now.

Local television showed union workers tossing rocks the size of basketballs onto the road leading to the mine in northern Chile to obstruct the potential entry of transports carrying replacement personnel.

Talks between the company and the union grew increasingly combative in recent weeks, with each accusing the other of not ceding ground in their demands.

Union President Luis Troncoso said there was no plan to halt the strike until the company improves its offer.

Workers say they have the support of other Chilean mining unions, and that their fight could influence the outcome of upcoming negotiations at Codelco, Chile's state copper miner and the world's largest producer of the red metal.

"I think we are fortifying the (national) union movement," Troncoso said.

BHP Billiton (BHP.AX), the world's largest miner, owns 57.5 percent of the open-pit mine, while No. 2 Rio Tinto Ltd (RIO.AX) has a 30 percent stake.

While workers are demanding a large increase in salary and benefits that reflect soaring copper prices, the company seeks to protect itself from the next cyclical downturn in prices for the red metal.

Before the strike, Escondida was expected to produce close to 1.3 million tonnes of copper in 2006, about the same as it did in 2005. That is roughly 3,500 tonnes of copper a day.

Copper futures in New York opened lower Monday but prices received a slight boost as the Escondida strike started.

More than 2,000 union workers were to take part in the strike at Escondida after negotiations for a new wage contract failed even after government mediation.

Union Secretary Pedro Marin said the workers would also march in Antofagasta, the major city in the mining region, to press their demands for a better wage deal.

He expected to draw support from others who use the city as a base and work in other mines in the region.

Chile is the world's largest copper producer and host to many international miners.

Marin said the union planned to employ noisy tactics like the ones used by Chilean students in nationwide protests in June. Those strikes ended in sometimes violent clashes with police.

Nearly 1 million Chilean students took part in nationwide strikes in early June as they demanded more education funding in destructive marches in the capital Santiago.

Escondida miners reject BHP Billiton pay offer

Workers at the world's largest copper mine in Chile have rejected an offer from owner BHP Billiton and have said they anticipate a walk-out that could last a month.

The workers late Monday (local time) refused to vote on a proposal from the Anglo-Australian resources giant put forward on Friday, leaving the mine's production at less than half of normal.

In a meeting of nearly 2,000 workers, the miners decided the 3 per cent wage hike plus $US16,000 per-worker bonus the company offered was not enough, union spokesman Pedro Marin said.

They are seeking a 13 per cent pay increase and a $US30,000 payment per miner, he said.

The strike began Monday (local time), jeopardising 8 per cent of global copper production and spurring prices to a three-week high.

The mine's main customers are Japan, Germany, Canada, China, Sweden, Brazil, South Korea and France.

Miners say their demands reflect a tripling in global copper prices since the previous collective bargaining agreement reached three years ago.

Escondida produces on average 125,000 tonnes of copper per year, nearly 20 per cent of total production in Chile, the world's largest copper producer.

-AFP

Mineweb - 09-AUG-06 - By: Dorothy Kosich

Labor strife could impact up to 16% of copper supplies


As BHP Billiton declared force majeure Tuesday for copper concentrate delivery and suspended cathode production at the world's largest copper mine, Escondida's reduced production--if compounded by additional labor strife at other copper mines--could result in the loss of 16% of the world's copper mine production this year.


Meanwhile, Japanese and Chinese metals smelter companies said Tuesday that it's too early to determine the impact of the Escondida mine strike in Chile on copper concentrate smelting. The workers at the world's largest copper mine Tuesday predicted their walkout could last as long as a month.

Sydney-based Commodities Analyst Alan Heap of Citigroup said the "copper industry has been plagued by union disputes for months now, as minesite workers seek a greater share in their booming sector." In fact, Heap declared that he expects more of the same this month as 2,000 workers at Escondida went on strike this week and their Peruvian colleagues at Antamina want an 18% wage increase. Miners at British Columbia's Highland Valley copper mine are expecting a "generous September contract renewal,"" he added.

Managers at Falconbridge's Lomas Bayas copper mine in Chile averted a strike last May with a deal that included an 8 % pay raise and $4,400 individual worker bonus payment. The FMC union, which represents the striking miners at Escondida, is asking for a 13% pay raise and a $30,000 net bonus per workers. Union Secretary Pedro Marin said Chile's copper companies will have combined profits of $19.15 billion this year. Meanwhile the copper price has risen from 67-cents when the last wage contract was negotiated in 2003 to $3.50 per pound.

Later this year, the world's largest copper miner state-owned Codelco of Chile will have salary negotiations with its own workforce. The Escondida walkout is believed to be influencing the future of the Codelco talks as the Chilean Government scrutinizes BHP's responses to the labor dispute.

Last month, Mexico's Grupo Mexico fired around 2,000 workers at its La Caridad copper mine in the Sonora State in the wake of a strike to protest the firing of a union chief, which began in March. Meanwhile, managers at the Konkola copper/cobalt mine in Zambia agreed to a 20% hike in wages in July. The mine is a joint venture between U.K.-based Vedanta Resources and the Zambian Government.

Heap said that "it's not surprising that copper's price is sensitive to this news. These strike-bound operations alone represent 2.2MTpy of copper-producing capacity or 16% of the forecast mine production in 2006." He estimated that year-to-date total contained metal production lost to strike action stands at 79k without considering loses caused by equipment failures and material shortages.

Heap said that Japan's smelters are most vulnerable to the Escondida strike since they depend on 70% of the Chilean copper mine's annual output. Escondida produces roughly 20% of Chile's total annual production. The company's products are shipped to Japan, Germany, Canada, China, Sweden, Brazil, South Korea and France.

Reuters reported that officials of both Japanese and Chinese metals smelting companies expected a prolonged strike at Escondida, but explained it was too early to determine its impact on their production. Japanese smelters are believed to hold about one month's worth of copper concentrate inventories, according to sources quoted by Reuters.

Copper is used in electrical, electronic, and other applications, as well as transportation systems, housing, commercial construction and appliances. The base metal is used in plumbing, automobile, trains and planes, and most other machinery that uses electricity or has water flowing through its engines. The average American home has at least 30 to 40 motors that rely on copper wires inside the motor.

A force majeure is a contract clause that releases a company from its contractual obligations due to an extraordinary event beyond its control.

BHP Says It Wants Agreement With Striking Chile Copper Workers

Aug. 10 (Bloomberg) -- BHP Billiton, the world's largest mining company, said it wants to reach an agreement with the union at its Escondida mine in Chile to settle a strike that cut copper output.

Road blocks laid by workers earlier in the week at the mine, the world's largest copper supplier, have been cleared, said Emma Meade, a spokeswoman at Melbourne-based BHP Billiton., Pedro Marin, the union's spokesman, yesterday said BHP Billiton hadn't offered a new wage proposal to workers in meetings this week.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' BHP's Meade said in an e-mail.

The strike this week at the northern Chilean mine helped drive up copper prices in New York and London. BHP Billiton, the world's largest mining company, has said the labor dispute may disrupt deliveries of copper concentrate, which usually contains about a third copper.

MCX expecting three-fold jump in daily turnover


Ludhiana, Aug 09, 2006 (Asia Pulse Data Source via COMTEX) -- Enthused by the growing participation of traders and users in metal trading, the Multi Commodity Exchange (MCX) of India Limited is anticipating more than a three-fold increase in the per day value of trading and volume of metals traded by the end of this fiscal.

"With more and more traders and users of non-ferrous metals participating in metal trading, we expect that the daily trading and volume of metals, including copper, zinc and aluminum will increase over three times against present position by the end of this financial year," MCX, Manager (Product Knowledge Management), Ankit Singhal told PTI here.

Singhal was here to attend a seminar on metal trading.

At present, the per day turnover (single sided) of copper, zinc and aluminum in MCX stands at Rs 900 crore, Rs 150 crore and Rs 50 crore respectively. But the exchange expects daily turnover of Rs 3,000 crore in copper, Rs 400 crore in zinc and Rs 200 crore in aluminum by the end of this fiscal.

Similarly, it hopes that the per day volume size should jump to 50,000 MT in copper, 20,000 MT in zinc and 4,000 MT in aluminum.

The commodity exchange expects maximum participation in metal trading from Maharashtra, Delhi, Gujarat, Punjab and Madhya Pradesh.

The MCX has also tied up with Comex (New York based exchange) for copper and London Metal Exchange (LME) for other metal commodities for sharing expertise and knowledge in the trading.

Copper in London Rises to 3-Week High on Chile Strike Concern

Aug. 10 (Bloomberg) -- Copper prices in London rose to their highest in more than three weeks amid concern that supply growth may lag demand because of a strike at Chile's Escondida, the world's largest mine.

Union leaders at the mine, which supplied 8.5 percent of global mined copper last year, shelved talks yesterday after the lack of progress at a meeting a day earlier. BHP Billiton, which owns a controlling stake in Escondida, will meet the union today at 5 p.m. local time. BHP has said it may stop deliveries to smelters in Asia and Europe because of the stoppage.

``It looks like the strike's impact to production at the mine may be quite big'' as negotiations are still inconclusive, Yuan Fang, a metal futures trader at Shanghai Dongya Futures Co., said by phone today.

Copper for three-month delivery rose as much as $70, or 0.9 percent, to $8,100 a metric ton on the London Metal Exchange, the highest since July 17. The metal traded at $8,082 at 12:16 p.m. Singapore time.

Metal for delivery in October rose as much as 2,560 yuan, or 3.8 percent, to 70,250 yuan ($8,818) a metric ton on the Shanghai Futures Exchange. It traded at 70,020 yuan by midday break at 11:30 a.m. local time.

Pedro Marin, a union spokesman at Escondida, said leaders are evaluating whether to return to the negotiating table. ``We don't want more of the same,'' he said yesterday by phone from the city of Antofagasta.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' Emma Meade, a spokeswoman at BHP Billiton in Melbourne, said in an e-mail today. BHP Billiton, the world's largest mining company, offered a rise of 3 percentage points above the inflation rate compared with workers' demands for a gain of 13 percentage points.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, rose as much as 2.9 percent to 69,900 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 rose 1.5 cents, or 0.4 percent, to $3.725 a pound on the Comex division of the New York Mercantile Exchange at 12:08 p.m. Singapore time in after-hours trading.

BHP Says Chile Copper Stockpiles Are Low, Talking to Customers

Aug. 10 (Bloomberg) -- BHP Billiton said copper concentrate stockpiles at its Coloso port in Chile are ``very low'' and was talking to customers about deliveries after a strike at the world's largest copper mine stretched to a fourth day.

Supplies from the Escondida mine, which is operating at 40 percent capacity, are running down, Emma Meade, a spokeswoman for the Melbourne-based company said today.

The strike at the northern Chilean mine is helping drive up copper prices in New York and London. BHP Billiton, which owns 57.5 percent of the mine, has said the dispute may disrupt deliveries of copper concentrate, which usually contains about a third copper.

``With concentrate, the stockpiles at Coloso are actually very low,'' Meade said. ``We're running at 40 percent and we just need to talk to them about how we meet their requirements going forward. We're just going to be able to ship what we produce.''

Shares in BHP Billiton, the world's largest mining company, fell as much as 31 cents, or 1.1 percent, to A$26.92 on the Australian Stock Exchange. They traded at A$27.22 at 3:15 p.m. Sydney time.

Mine management and labor union workers are meeting again to discuss workers wage claim today after talks were postponed yesterday, Meade said.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' BHP's Meade said in an e-mail.

Road blocks laid by workers earlier in the week at the mine were cleared. Pedro Marin, the union's spokesman, yesterday said BHP Billiton hadn't offered a new wage proposal to workers this week.

AFX - 14 August 2006


SEOUL (XFN-ASIA) - The world's fifth largest steel maker, POSCO, has rejected reports it is having trouble covering nickel short positions on the London Metal Exchange (LME) and is being forced to roll them forward at increasingly greater expense.

'It is a groundless market rumor,' a POSCO spokesperson said. Nickel is a key ingredient for making stainless steel.

Earlier The Wall Street Journal reported that POSCO, was short by 10,000 tons of nickel against its LME positions, having bet prices would fall. Prices though, as a result of strong demand from stainless-steel producers, have been on an upward trend this year.

'It makes no sense. The positions for POSCO to cover is less than 1,000 tonnes -- a futures deal traded in April,' the POSCO spokesperson said.

The POSCO official also rejected the report's claim that POSCO was some 20,000 tons short on the physical nickel market, after it underbought against its customer requirements.

'POSCO, a steel maker, is the very consumer, not a speculator, of nickel. Most of its demand is supplied by long-term contracts,' the official said.

The report said although the price at which POSCO went short, or bet that the price would fall, isn't known, to buy 30,000 tons of nickel on the LME and physical market currently would cost at least 810 mln usd based on an LME price of 27,000 usd a ton. In London Friday, nickel for delivery in three months time closed at 26,600 usd a ton on Friday.

Reuters - 14/08/2006 13:42

Copper higher on supply upsets


London - Copper prices rallied on Monday as supply started to get tighter in the biggest consumer of the metal and as a strike at the world's largest copper mine moved into a second week.

"Metals are consolidating just below recent peaks on supply disruptions," UBS analyst Robin Bhar said.

London Metal Exchange (LME) copper was up $100 at $7 670/7 690 a tonne at 09:40 GMT, completing its recovery from the 4% loss seen at one point on Friday after talks resumed at the key Escondida mine in Chile between the union and majority owner BHP Billiton.

The union's president said on Sunday that talks might last another week at the mine, which accounts for 8% of the world's copper output.

Copper hit a record $8 800/tonne in May.

In China, which consumes a fifth of the world's copper, recent sales of metal by Beijing's State Reserves Bureau had been weighing on futures prices in Shanghai and London, sharply reducing the country's imports and encouraging exports.

But that selling programme may now be reaching its conclusion.

"The SRB was looking to sell 100 000 tonnes of copper this year. They look to have sold 60 000 to 80 000 tonnes. Those sales have depressed the local market to the point where it was not worthwhile importing copper," Bhar said.

"But as those sales dry up, local prices could pick up again and encourage more Chinese imports," he added.

Dealers noted that with the exception of the soon-to-expire August contract, prices for nearby Chinese copper futures were now above prices for material for delivery further in the future, known as backwardation.

"The gap between Shanghai and the LME is narrowing again. You can see it most clearly when the LME tanks and Shanghai doesn't fall as much," a futures trader at a Chinese copper producer said.

Nickel prices also rose, with three-month futures at $26 850/27 000, versus $26 700 and holding short of last week's record $27 300.

South Korean steel producer Posco Co Ltd on Monday dismissed a Wall Street Journal report that it held a loss-making short position of 10 000 tonnes of nickel on the LME and of an additional 20 000 tonnes in the physical market.

A Posco official said the company was short by less than 1 000 tonnes on the LME, and denied the company had speculated on falling nickel prices.

Stocks of nickel in LME warehouses were 5 940 tonnes, of which nearly 3 600 tonnes have already been earmarked for delivery. Daily world nickel consumption is around 3 500 tonnes.

"Nickel availability should improve but in the near term the market looks to remain very tight," a London trader said.

In addition to low stocks and strong demand from stainless steel makers, nickel prices are firm after a strike at Inco, which began shutting down production at the end of July at its 54 000 tonne-per-year, Voisey's Bay nickel mine in Canada.

Aluminium was up $10 at $2 530/ ,535 and zinc gained $30 at $3 290/3 320.

COMEX copper ends near highs amid spread dealings

NEW YORK, Aug 14 (Reuters) - Copper futures in New York ended near their session highs in extremely thin dealings on Monday, as traders focused on the September/December roll while uncertainty over the outcome of the Escondida labor strike held the buyers at bay, sources said.

"Last week, we started our roll from September into December, and while the bulk of it was done last week, some people may have anticipated some more selling to start the week, but when it never materialized and they turned buyers of the spread later in the day, one COMEX floor dealer said.