Copper Falls as Data on U.S. Economy Signals Demand May Slow

By Millie Munshi and Katy Watson

Aug. 24 (Bloomberg) -- Copper prices in New York fell the most in a week on signs demand may slow after new-home sales in the U.S. declined more than economists forecast in July and a measure of orders for durable goods dropped.

Copper has dropped 15 percent from $4.04 a pound, the highest ever, on May 11. The number of unsold houses climbed to a record, deepening a slump in an industry that fueled economic expansion for five years, Commerce Department data showed. Declines in demand for commercial aircraft and motor vehicles resulted in a 2.4 percent drop in total durable-goods orders in July.

``You've got this macro situation which is deteriorating and demand that is slowing,'' said David Threlkeld, president of Resolved Inc., a copper trading company in Scottsdale, Arizona. ``I think copper is going to collapse.''

Copper futures for December delivery fell 4.85 cents, or 1.4 percent, to $3.419 a pound on the Comex division of the New York Mercantile Exchange, the biggest percentage decline since Aug. 16. Prices still have doubled in the past year. Builders are the biggest users of copper in the U.S.

Copper for delivery in three months on the London Metal Exchange declined $180, or 2.4 percent, to $7,430 a metric ton on the London Metal Exchange.

Demand lagged behind supply in the first half, creating a surplus of 81,000 tons, the World Bureau of Metal Statistics said today. Consumption in China, the world's largest consumer of copper, fell 8.4 percent.

Escondida

Copper earlier climbed as much as 1.2 percent in London after Chilean workers at BHP Billiton Ltd.'s Escondida mine, the world's biggest source of the metal, said they are prepared to extend a strike, further squeezing supplies. Union members walked off the job on Aug. 7.

``I think the market has written these events into the price,'' said William Adams, an analyst at Basemetals.com in Saffron Walden, England. ``People are thinking this strike is not going to go on for too much longer.''

Nickel prices gained $150, or 0.5 percent, to $28,900 a ton in London after earlier climbing as much as 3.5 percent. Prices have more than doubled this year.

Inventories monitored by the LME dropped 240 tons, or 3.6 percent, to 6,426 tons today.

Prices on Aug. 22 reached $29,950, the highest in at least 19 years. Stockpiles of the metal used to make stainless steel have tumbled 82 percent this year, and the prospect of shortages prompted the LME to impose trading restrictions.

``The nickel market is likely to remain tight for some time, and critically low stocks could prompt further price strength and clearly more volatility,'' Robin Bhar, an analyst in London at UBS AG, said in a report.

Prices for immediate delivery exceeded benchmark three-month prices by as much as $5,250 a ton as of Aug. 22, tripling from Aug. 1 and signaling a supply squeeze.

Output has declined this year. A strike at Inco Ltd.'s Voisey's Bay mine in Newfoundland has curbed production since July 28. BHP said production at its Yabulu mine in Australia dropped by a third in the second quarter.

The shortfall in nickel will be 30,000 tons this year, according to Toronto-based Inco, the world's second-largest producer. Stainless-steel output will rise 8.6 percent to 26.4 million tons, according to the International Stainless Steel Forum.

Times Online August 25, 2006

Yunnan Copper, Chinas third-largest producer of the metal, aims to increase its mining output at home and overseas to 300,000 tonnes of copper in 2010, from about 130,000 tonnes at present.

Copper Declines After BHP Resumes Cathode Output in Chile

By Feiwen Rong

Aug. 25 (Bloomberg) -- Copper fell in Shanghai after BHP Billiton, the world's biggest mining company, resumed production of copper cathodes at the company's Escondida mine in Chile, where 2,052 workers went on strike Aug. 7.

Production at Escondida, the world's largest copper mine, remains at 50 percent of normal and the cathode plant, which converts the ore to a metal for shipment, is running at about 10 percent, company spokeswoman Alejandra Wood said yesterday in a phone interview from Santiago.

``The focus remains on Escondida, if BHP can bring back some of the production, that's bearish for the copper prices,'' Wang Zheng, metal analyst at Dalu Futures Co. in a phone interview from Shanghai.

Copper for October delivery on the Shanghai Futures Exchange fell as much as 650 yuan, or 1 percent, to 67,150 yuan ($8,421) a ton. The contract traded at 67,570 yuan a ton at 2:24 p.m. Shanghai time.

Negotiations between Melbourne-based BHP and its striking workers remain frozen, erasing about $16 million a day of profit for owners that include London-based Rio Tinto Group and Tokyo- based Mitsubishi Corp. Escondida produced 8.5 percent of the world's mined copper last year.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, fell as much as 1 percent to 68,190 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Marianne Barriaux
Friday August 25, 2006
The Guardian

Miners were the heaviest fallers among leading shares. BHP Billiton fell 25p to 989p as concerns continued over the strike at its Escondida copper mine in Chile. The shares were also hit by news that Marks & Spencer had replaced BHP on the focus list of investment bank ING.

Other miners were down as concerns over a US slowdown placed the future of the commodities "super cycle" in doubt. Lonmin was down 82p to 27.40, and Rio Tinto fell 89p to 26.40.

William Adams, of the news and research site BaseMetals.com, said: "With the US running a trade deficit, a slowdown in the US means the US will import less, especially from Asia and China. In turn, if these countries are not able to export as much, then they will not have to import so much raw material, and before you know it, demand for commodities suffers."

Dow Jones Newswires - Merrill Keeps Sell On Jiangxi Copper


STOCK CALL: Merrill Lynch keeps Sell on Jiangxi Copper on lower copper price outlook, pressures on margins for smelters' short mine concentrate.

JXC posted strong 1H net profit of CNY0.72/share this week, +97% on-year; but 10% below Merrill's forecast due to 14% lower gold output, higher tax rate.

Merrill stays concerned about sustainability of current copper prices of US$3.44/lb, particularly once strike at world's largest copper mine Escondida is resolved.

Dow Jones Newswires - 25 Aug 2006

Imperial Set To Drill Giant Copper Property


VANCOUVER, BRITISH COLUMBIA - Imperial Metals Corporation announces that drilling will begin shortly on a 1,500 metre diamond drillhole at its wholly owned Giant Copper property.


The AM Zone, a breccia pipe with a horizontal dimension of 300 metres by 200 metres, is the most explored zone on the Giant Copper property. The breccia pipe has been explored since the 1930's by drifting, raising and diamond drilling over a vertical interval of 460 metres, and remains open for expansion to depth. The planned 1,500 metre drillhole will test the depth extent of this zone, with emphasis on the extension of the higher grade mineralization which is focused on the northern nose of the breccia pipe.

Drilling in 1995 and 1996 by Imperial continued to expand the known mineralization in both the AM Zone and Invermay Zone. AM Zone hole GSC95-5 located in the southern part of the breccia intercepted 0.64 metres grading 8.12 g/t gold and 7.0 g/t silver, and 26 metres grading 0.417% copper, 0.313 g/t gold, 16.0 g/t silver and 0.012% molybdenum.
Invermay Zone hole GCS96-4 intercepted 3.0 metres grading 0.658% copper, 9.859 g/t gold and 26.7 g/t silver, not included in a longer interval of 92.4 metres grading 0.198% copper, 0.23 g/t gold and 7.8 g/t silver. Both of these holes are located outside the north nose of the AM breccia, which was the focus of historic exploration.


The 2,880 hectare property, located 220 kilometres east of Vancouver near Hope, hosts a copper-gold-silver-molybdenum system with an associated breccia pipe and base metal veins. All of the showings appear to be related to a central hydrothermal system driven by a multiphase porphyritic intrusive. Numerous widespread showings attest to the strength of the system, and all of the showings appear to be related to the central hydrothermal system.

Recent world wide exploration for high grade deposits at the root of porphyry systems and the buoyant commodity market encourages deep exploration at Giant Copper.

Steve Robertson, P.Geo. is the Qualified Person as defined by National Instrument 43-101 for the exploration program. The Company has filed a 43-101 Technical Report for the Giant Copper property which can be viewed on the Sedar website www.sedar.com or on Imperial's website www.imperialmetals.com.

Imperial is a mine development and operating company based in Vancouver, British Columbia. The Company's key properties are the Mount Polley open pit copper/gold producing mine (100% interest) in central British Columbia, the Huckleberry open pit copper/molybdenum producing mine (50% interest) in northern British Columbia, and the development stage Sterling gold mine (100% interest) in southwest Nevada.

Dow Jones Newswires - Monday, August 28, 2006

Copper Fundamentals In Hands Of Disruptions


Copper market in 2007 to be in similar position as in past 2 years - looks as though market could move into oversupply particularly if demand weak, but surplus remains dependent on delivery of projects on schedule, and less supply disruption than has been case this year, says Macquarie Research. Base case is for 190,000-ton surplus in refined copper in 2007, then if demand bounces back in 2008, refined copper market could move into deficit in first half of 2008; "this could mean some weakness next year, but a rebound in prices again in 1H08."

Mining Weekly - 28 August 2006

BHP to increase production at Escondida copper mine


BHP Billiton will seek to increase production in Chile at its Escondida copper mine, the biggest in the world, as more than 2 000 workers extend a strike that's cut output in half into a fourth week.

The mine may try to hire more replacement workers this week, adding to the 50 already employed, Alejandra Wood, a spokeswoman for the Melbourne-based company said late yesterday from Santiago. Neither BHP nor the labor union have plans to restart talks, which have been frozen since the union rejected the company's August 21 offer.

The goal is to produce as much as possible, given the situation, Wood said. Production is now at 50% of pre-strike levels. Output at the cathode plant, where copper ore is refined into a metallic form, is at 15%, Wood said.

Workers at the mine, which accounted for about 8,5% of the world's mined copper last year, began striking August 7 in pursuit of increased pay and benefits. They are seeking a bigger share of the company's profits after copper prices surged to a record this year.

BHP, which owns 57,5% of the mine, reported a 63% jump in full-year profit to a record $10,45-billion last week. Escondida's owners, which include London-based Rio Tinto Group and Tokyo-based Mitsubishi Corp., have said the strike is erasing about $16-million a day in profit.

Copper prices in Shanghai rose for the first day in four on concern rival copper mines may also face strikes. Labor talks are scheduled later this year at Chile's state-owned Codelco, the world's biggest producer.

Copper for October delivery on the Shanghai Futures Exchange gained as much as 570 yuan, or 0,8%, to 68 050 yuan ($8 537) a metric ton. The contract traded at 67 910 yuan a ton at 1:59 p.m. in Shanghai.

Copper supply in the medium term remains tight, Yu Mengguo, metal analyst at Jinpeng Futures Co., said by phone from Beijing. Stories of labor unrest in such a market make people more nervous about supply.

The Escondida union's lawyers are reviewing company plans to use subcontractors in new areas of the mine to increase production and may file a claim against the practice, union spokesman Pedro Marin said in a phone interview from Antofagasta, 1 200 km north of Santiago.

BHP's Wood said Chile's labor inspector in Antofagasta has approved of how the company is using subcontractors at the mine.

(AP Online via COMTEX) - SANTIAGO, Chile, Aug 28, 2006

Striking Miners Seek Share of Profits


The world's largest mining company has had a very good year, something not lost on its miners in Chile. Some 2,000 miners at BHP Billiton's Escondida mine in Chile have been striking since early August, demanding a larger slice of what one worker called "the cake" being enjoyed by the Anglo-Australian company in the form of record profits from soaring world metal prices.

The strike has roiled world copper markets, often setting off buying and selling waves. Copper from Escondida represents about 8 percent of world production, and the strike has brought about half that production to a halt - stoking fears of a shortage in an already tight market.

The strike is being closely followed across Chile, the world's largest copper producer, where the government is under pressure to spend more of its copper windfall and unions are waiting to see what kind of concessions the Escondida strikers gain.

But executives of BHP Billiton Ltd and other mining companies are wary of being locked into contracts that will mean significantly higher labor costs just as metal prices may be peaking.

There's no doubt, however, these are bonanza days for BHP Billiton. The Melbourne-based company reported it earned $10.45 billion for the year through June, an Australian corporate profit record.

When the Escondida miners' union last negotiated a contract with BHP Billiton three years ago, copper sold for about 80 cents a pound. Mines were mothballed. The industry was near the bottom of a bust cycle.

Since then, demand from fast-growing economies such as China and India have helped drive the price of copper to about $3.50 today. Strong demand, supply constraints and a broader rally in the commodities market pushed the price of copper to an all-time high of $4.08 a pound in May.

This time around, the workers want their share of the boom times. About 800 workers have been camped in tents in a sports center the company owns in the port city of Antofagasta since Aug. 7, having refused the company's contract offers.

The copper mine cuts a deep bowl into Chile's Atacama Desert, bordered by the Andes on the east and the Pacific Ocean on the west, outside of Antofagasta, 870 miles north of Santiago.

Oscar Moreno, 44, has worked 17 years at Escondida, where he drives the heavy-duty trucks and tractors used in mining operations. He lives with his wife and two of their children, in a house partly paid for with a loan from the company, in Antofagasta, about 125 miles away.

Moreno said he and the other workers generally work four 12-hour days, sleeping and eating at the mine, then have four days at home. He earns about $1,490 a month, plus quarterly bonuses.

"I feel my situation is good, compared to the general situation of workers in Chile," he said in a telephone interview from the strike camp. "I cannot complain, really, and I do not complain about my situation. My complaint is about the money that the company makes. We are asking for just one percent of the 'cake' it gets."

In reporting its annual profit - up 63 percent from the prior year - BHP Billiton noted the Escondida mine produced record volumes for the company.

But costs are on the rise, too. Labor is the company's third-largest cost, behind energy and mining expenses, according to the company's latest annual report.

BHP has offered workers a four-year contract that includes a 4 percent wage raise plus bonuses, up from an initial 3 percent offer. The workers want 8 percent plus bonuses, after initially asking for 13 percent.

"Our work force at Escondida is some of the highest-paid in Chile, and this is essentially the most attractive package that has been offered to the work force in that region," said Chief Executive Chip Goodyear, in a conference call.

Although the mine's name means "hidden" in Spanish, Escondida is now the center of attention for copper traders in New York and London. The slightest news or speculation will set off a flurry of buying or selling in the New York Mercantile Exchange, where millions of dollars in copper contracts change hands daily.

"Everyone is focused on Escondida," copper trader John Hanemann said.

The result of the Escondida walkout will have repercussions throughout the industry, traders and analysts say.

Contract talks at a number of copper mines - mainly in Chile - are due to expire in coming months, including Chile's state-owned Chuquicamate, the world's largest open pit copper mine. If workers at all six of the mines with expiring labor contracts opt to strike, 18 percent of world copper supply could be at risk, Merrill Lynch commodities strategist Francisco Blanch said in a recent report.

Chile represented about 36 percent of world copper production in 2005, well ahead of second-placed producer the United States, with about 8 percent of world output, according to the U.S. Geological Survey.

The country's leftist government has not intervened in the strike, although the impact on the economy is strong. Escondida paid $1 billion in taxes during the first half of this year alone, BHP Billiton's chief executive in Chile, Diego Hernandez, told the daily El Mercurio.

Other Chilean labor groups are also calling for some of the copper windfall, including powerful government-employee organizations representing school teachers and health workers.

And voices are emerging from inside President Michelle Bachelet's center-left coalition to increase government spending, especially in social sectors. The Christian Democratic Party, the largest in the four-party coalition, asked Bachelet for a double-digit increase in the 2007 budget now being drafted. Bachelet said the budget increase will be below 10 percent.

The Escondida miners, meanwhile, say they only want BHP Billiton to share a little of the bounty.

Carlos Munoz, a 45-year-old metallurgic plant operator, said the $1,080 he earns each month covers his family's basic expenses but not the needs of his 10-year-old daughter, Camila, who suffers from a chronic medical condition and needs an ear operation.

"Not even the bonuses are enough for me to give her everything she needs," he said. Bottom line, he said, "we live very tight."

Copper Falls as Rising Inventories May Signal Demand Is Slowing

By Millie Munshi

Aug. 28 (Bloomberg) -- Copper futures in New York fell as rising stockpiles fueled speculation that demand may be slowing.

Inventories monitored on the Comex division of the New York Mercantile Exchange jumped 52 percent last week, and a U.S. government report showed a decline in new-home sales. Builders are the biggest users of copper in the U.S.

``There were some extra stocks coming into the Comex warehouse,'' said John Hanemann, president of Hanemann Trading Co. in New York. ``There just doesn't seem to be a lot of demand.''

Copper futures for December delivery fell 0.65 cent, or 0.2 percent, to $3.425 a pound at 9:21 a.m. on the Comex division of the New York Mercantile Exchange. Copper, after more than doubling in the past year, has declined 15 percent since reaching a record $4.04 on May 11.

The London Metal Exchange is closed today for a national holiday.

Copper in China Little Changed as Traders Await Funds' Return

By Chia-Peck Wong


Aug. 29 (Bloomberg) -- Copper prices in Shanghai were little changed as traders sought new trading leads while waiting for the return of hedge and investment funds to the market.

Prices of copper have surged 63 percent this year partly due to buying from such funds, which are seeking better returns than those offered by the equity and bond markets. Traders such as Wang Zheng said these funds have been less active in trading commodities this quarter.

``The direction for copper isn't clear and trading activity in Shanghai has fallen,'' Wang, a trader and analyst at Shanghai Dalu Futures Co., said by phone today. ``We're hoping that the funds will return soon or some fresh news will stimulate trading.''

Copper for October delivery fell as much as 340 yuan, or 0.5 percent, to 67,540 yuan ($8,478) a metric ton on the Shanghai Futures Exchange. The contract, which earlier rose as much as 170 yuan, or 0.3 percent, traded at 67,850 yuan by the midday break at 11:30 a.m. local time.

News that union members at BHP Billiton's Escondida mine in Chile will begin demonstrations this week unless the company agrees to restart talks on wages isn't having an impact on prices, said Wang.

``Everyone's tired of the Escondida news,'' he said.

The strike at Escondida, the world's biggest copper mine, has entered its fourth week. More than 2,000 workers went on strike Aug. 7, and negotiations have been frozen since the union rejected BHP's latest offer on Aug. 21.

BHP, Rio Tinto

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, rose as much as 2.4 percent to 68,600 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Metal for December delivery fell 0.05 cent to $3.450 a pound on the Comex division of the New York Mercantile Exchange at 11:45 a.m. Shanghai time.

Copper for three-month delivery gained $26, or 0.3 percent, to $7,586 a metric ton on the London Metal Exchange as of 11:41 a.m. Shanghai time. The metal, used in wiring and plumbing, has more than doubled in the past year. It rose to a record $8,800 on May 11.

BHP Billiton, the world's biggest mining company, owns 57.5 percent of Escondida. Rio Tinto owns 30 percent, while a group led by Mitsubishi Corp. owns 10 percent. The International Finance Corp. owns the rest. Mine management said Aug. 16 the dispute was costing the $16 million in lost profit a day.

Aluminum prices in Shanghai rose because more traders preferred to trade the lightweight metal after inventories declined, Li Rong, a metal analyst at Great Wall Futures Corp., said by phone from Shanghai.

``Aluminum's demand and supply factors seem to be better, especially after stockpiles fell so drastically last week,'' he said.

Aluminum stockpiles in Shanghai Futures Exchange warehouses plunged to their lowest level in 15 months as manufacturers used more of the metal instead of pricier copper, and exports increased.

Copper in Shanghai Falls on Concern Demand May Slow in U.S.

By Chia-Peck Wong

Aug. 30 (Bloomberg) -- Copper in Shanghai fell after U.S. consumer confidence dropped in August, increasing concern demand may be curbed in the world's second-biggest user of the metal.

The Conference Board's index of confidence fell to its lowest in nine months, as higher fuel prices raised inflation concern and the housing market slowed. Builders are the biggest users of copper, which has more than doubled in price during the past year as demand surged for wire and pipe.

``The consumer confidence data is a weak sign for copper,'' Li Ling, a trader at Star Futures Co., said from Shanghai.

Copper for October delivery fell as much as 860 yuan, or 1.3 percent, to 66,950 yuan ($8,413) a metric ton on the Shanghai Futures Exchange. It traded at 67,240 yuan by midday break.

The board's index dropped to 99.6 from 107.0 in July, the New York-based business group said yesterday. Sales of pre-owned U.S. homes fell in July to the lowest in more than two years, the National Association of Realtors said last week.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, fell as much as 1.2 percent to 67,800 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Dow Jones - 30 August 2006

LME review: Copper liquidated; long holders grow impatient


Long position holders liquidated London Metal Exchange three-month copper after growing tired of waiting for prices to move outside tight ranges in slow summer trading, traders said.

Copper maintained a tight range between $7,450-$7,580 a metric ton for the morning session before light liquidation in the afternoon pushed prices back 2.7% to an 11-day low of $7,350/ton. Prices closed late kerb in London down $165 on previous PM kerb levels at $7,395/ton.

The bearish tone in copper was reinforced by market talk that labour negotiations at Chile's Escondida copper mine may be nearing a resolution after 23 days, another trader said.

"Rumours are going round the floor that (Escondida) talks are going very well and that's had an impact on prices," said one trader.

Nickel prices retreated to $28,450/ton at late kerb, down $950/ton on previous kerb prices. Earlier in the session, prices found good support following another stock drawdown. Nickel stocks fell by 312 tons to 5,808 tons while LME cancelled warrants rose to 74.28% from 72.65%, leaving just 1,494 tons available to the market.

LME aluminum prices retreated from a high of $2,515/ton to $2,470/ton at late kerb in London and remained bound by resistance at $2,440/ton-$2,500/ton. Prices closed just $3 shy of earlier intra-day lows of $2,470/ton at late PM kerb.

Zinc prices fell $65 from previous kerb levels to $3,295/ton after failing to mount resistance at $3,400/ton.

Bloomberg - 30 August 2006

Copper prices fall on signs of slowing economy, metals demand


Copper fell the most in almost two weeks after a private survey showed U.S. consumer confidence is the lowest in nine months, fueling concern that a slowing economy will curb demand for metals.

The Conference Board's index of confidence dropped to 99.6 this month from 107.0 in July, as higher fuel prices raised inflation fears and the housing market slowed. Builders are the biggest users of copper, which has more than doubled in price during the past year as demand surged for wire and pipe.

"We've been seeing softening economic data and today's consumer confidence report played into that general sentiment," said Chip Hanlon, president of Delta Global Advisors Inc. in Huntington Beach, California. Prices may drop 10 percent by the end of September if economic conditions continue to slow, Hanlon said.

Copper futures for December delivery fell 6.65 cents, 1.9 percent, to $3.384 a pound on the Comex division of the New York Mercantile Exchange, the lowest closing price and the biggest one-day drop for the most-active futures contract since Aug. 17. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.

Copper for delivery in three months dropped $160, or 2.1 percent, to $7,400 a metric ton at 6:44 p.m. on the London Metal Exchange. Nickel fell $900, or 3.1 percent, to $28,500 a ton after earlier rising to $29,900.


Home sales fall

Sales of previously owned U.S. homes fell in July to the lowest in more than two years, the National Association of Realtors said last week. Sales of new homes fell to the second- lowest this year, according to the Commerce Department. Home sales are falling after five years of record gains, slowing price increases and making it harder for owners to extract equity, a source of funding for consumer spending in recent years.

"The housing slump will put a damper on" U.S. copper demand," said Darren Stoody, futures trading manager at Omnisource Inc., a scrap metal recycler in Fort Wayne, Indiana.

Copper also was pushed lower by speculation that a strike at BHP Billiton Ltd.'s Escondida mine in Chile will soon be resolved.

Workers at the world's biggest copper mine, who are seeking a bigger share of BHP's profit after copper prices doubled to a record in the past year, said they expect to resume talks on a settlement. Production at Escondida has been cut by about half, and no negotiations are scheduled, Melbourne-based BHP said.


'Digging' in

"The market's still holding out for a reasonably quick settlement," said David Thurtell, a metals analyst at BNP Paribas in London. "It looks as though BHP is digging its heels in, and although they've only had fairly limited success so far in getting outside workers in, the bottom line is the miners don't really like being on strike."

The metal, which reached a record $8,800 on May 11, has lost 6.6 percent since the strike began Aug. 7, on signs of slowing economic growth and rising inventories.

Also on the LME, nickel plunged $900, or 3.1 percent, to $28,500, zinc dropped $65 to $3,295 a ton, while aluminium was $15 lower at $2,470 a ton. Lead gained $5 to $1,225 a ton and tin was $155 higher at $8,700 a ton.

COMEX copper ends off lows in technical trade - COMEX copper down 2 pct at open on local selling


NEW YORK, Aug 29 (Reuters) - Copper futures in New York settled down but off their session lows Tuesday after an early push to a key support level held and forced some investors to cover their short positions, sources said.

"We came down and tested trend-line support at around the $3.34-$3.35 level, and bounced from there," said one broker at a futures commission merchant.

Active December copper lost 6.65 cents, or 1.9 percent, at the close to settle at $3.3840 a lb on the New York Mercantile Exchange's COMEX division. Trading ranged from $3.46 to an eight-day low at $3.3450, after sell-stop orders were triggered through the $3.3850 a lb level, floor dealers said.

Copper for September delivery closed at $3.3905 a lb, down 6.40 cents on the day, while spot August, which expired after the close, sank 6.10 cents to $3.4230.


COMEX final copper volume was estimated at 18,000 lots, more than double that of Monday's official count of 6,444 lots.

Nearly 3,866 lots of spreads were traded on the day, with market players continuing to roll positions out of September copper and into further delivery months ahead of September copper's first notice day on Thursday.

The market also took a hit following weaker-than-expected U.S. consumer confidence data for August, which fell to their lowest levels since November 2005.

With a lack of any new developments in the ongoing labor negotiations at Chile's Escondida, the world's largest copper mine, dealers said the market's focus would now turn to the spate of U.S. economic data set for release this week.

On Wednesday, attention will turn to second quarter U.S. Gross Domestic Product, expected at 3.0 percent. In the first quarter, the U.S. economy grew 5.6 percent.

Fundamentally, a strike at the Escondida copper mine, now in its fourth week, continued to be a supportive factor as the uncharacteristically long strike weighed on an already tight market.

Talks between the two sides broke off more than a week ago after the 2,052-member union at Escondida rejected an offer for a 4 percent raise in a four-year contract and a special bonus of $18,000.

The strike has seen production of concentrates from the mine cut by 50 percent and cathode production is at 15 percent of normal output.

Chile, the world's biggest copper miner, produced 458,214 tonnes of the red metal in July, up 9.1 percent from the same month last year, the government said Tuesday.


London Metal Exchange inventories fell 700 tonnes to 124,125 tonnes on Tuesday, while COMEX copper inventories rose 1,027 short tons to 12,413 tons in Monday's data.

LME three-months copper closed at $7,390 a tonne, down $160 from Friday's kerb close.

Peru's mine protests flare after eerie calm - By Robin Emmott


LIMA, Peru (Reuters) - After a year of eerie quiet in Peru's anti-mining protests, peasants who forced Latin America's top gold pit to close have rudely reminded President Alan Garcia of one of the most complex problems facing his new government.

Social workers, local priests and analysts say the sort of demonstrations that shut U.S-owned Yanacocha on Monday are unlikely to end until money trickles down to poor Andeans to convince them the industry is not a threat to their livelihoods.

"The problem is that there are people who don't just want to freeze our operations at Yanacocha but to freeze mining in Peru completely," said Carlos Santa Cruz, a senior director at Yanacocha's owner, Denver-based Newmont Mining.

Finding money for poor mining regions is not a problem in the world's No. 3 copper producer as Peru enjoys a three-year bonanza in international metals prices. Garcia won a pledge by miners last week to make a one-off $774 million payment to improve the lives of the half of Peruvians who live on $1 a day or less.

That is on top of a record $800 million that mining regions will receive this year from royalties and mine income tax.

But much of that money is being spent by local mayors who are keen to glorify their term in office and win reelection in municipal elections in November. Monuments ranging from a tribute to the iguana to unheated outdoor swimming pools in the freezing Andes are just some of the public works in towns without running water, roads and electricity, fueling frustrations among locals.

In the northern Andean province of Cajamarca, home to Yanacocha, the local government aims to build a bullring at a cost five times that of the region's annual health budget.

"It's clear the spending isn't satisfactory," said Energy and Mines Minister Juan Valdivia. "There has been permanent conflict."

International mining companies have called on the government to implement a spending reform and Garcia has promised to respond, pledging that his government will work with town halls to draw up better projects that can also create jobs.

But in the short term, the government, communities and miners are only blaming each other for the Yanacocha shutdown ahead of the first talks on Tuesday to end the closure.


BLAME GAME

"It seems to me that (Yanacocha) has handled things badly," Valdivia said, without giving more details. Miners blame the state for being absent in remote areas where miners operate.

"Miners cannot provide schooling, hospitals and jobs to everyone, although increasingly they do that," said Carlos del Solar, head of Peru's National Society of Mining.

The shutdown by protests at Yanacocha is the second since 2004, when farmers forced Newmont to abandon plans to develop its rich Cerro Quilish gold pit within the mine's huge complex.

Officials at Yanacocha say the mine is often targeted because it is so emblematic of Peru's mining boom over the past decade and because Cajamarca is one of the country's poorest provinces.

Farmers and locals say they are forced to protest or risk being forgotten in a country where Andean peasants live in societies unchanged since the Spanish conquest of the 1500s.

"What can we do? Yanacocha has not kept its promises," said Luciano Llanos, mayor of Combayo community near Yanacocha, although he said he did not want the mine to close permanently.

Chile Copper Miners to Vote Today to End Strike at BHP Mine

By Jeb Blount


Aug. 31 (Bloomberg) -- Workers at BHP Billiton Ltd.'s Escondida copper mine are set to vote today in Chile on a new labor contract, ending a 25-day strike that's disrupted supply.

BHP, the world's biggest mining company, agreed to increase wages by 5 percentage points above inflation and pay a 9 million Chilean peso ($16,705) bonus, company spokesman Mauro Valdes said yesterday from Santiago. Workers may return as early as tomorrow, he said. The offer was ``acceptable,'' union President Luis Troncoso said yesterday after presenting it to his members.

The price of copper, used in wires and pipes, has more than doubled in London in the past year on demand from China, prompting unions to seek a larger share of company profits. An accord with BHP may set a precedent for talks expected this year at other mines in Chile, the largest supplier of the metal.

``Escondida will fix a benchmark for all of the mining industry,'' said Leonardo Suarez, an economist at brokerage Larrain Vial SA in Santiago.``It will be difficult to negotiate for less than what they got.''

Copper for three-month delivery fell as much as $50, or 0.7 percent, to $7,400 a metric ton on the London Metal Exchange. The contract traded at $7,433 at 10:27 a.m. Shanghai time.

The offer was ``good'' and ``balanced,'' union spokesman Pedro Marin said yesterday. ``Effectively we'll have a deal,'' BHP's Valdes said in a phone interview. ``We're satisfied.'' The union and BHP held talks yesterday in Antofagasta.

Workers seeking better pay and benefits began the strike Aug. 7, reducing the mine's output by half. Mine executives said Aug. 16 the dispute was costing owners including Melbourne-based BHP, London-based Rio Tinto Group and Tokyo-based Mitsubishi Corp. $16 million in profit a day. Escondida accounted for 8.5 percent of all mined copper worldwide last year.

`Our Fight'

Government-owned Codelco, the world's largest copper company, will be negotiating wage agreements with workers this year at its Andina and Chuquicamata mines in Chile. BHP must reach an agreement with union miners at its Spence mine in Chile by Sept. 12 or face a possible strike. The nation produces 36 percent of the world's copper.

``This is not just our fight,'' said union president Troncoso. ``This is part of the fight by all miners in Chile to share in the high profits and high prices that the mining companies are earning.''

Bolstered by New York copper's surge to $4.04 a pound in May, BHP on Aug. 23 posted second-half profit of $6.1 billion, a record for an Australian company. Profit at Escondida more than tripled in the first six months of the year to $2.92 billion from $936.9 million a year earlier.

Replacement Workers

The Escondida's Workers Union No. 1, which represents 94 percent of the mine's employees, had been seeking a wage increase of 13 percentage points above inflation and a bonus of 16 million pesos a worker for a 36-month contract. Chile's inflation rate was 3.8 percent in July.

Chilean laws allowing the company to replace striking workers weakened the impact of the walkout, the union's Marin said. BHP said Aug. 25 it hired 50 replacement workers while 2,053 walked out.

Resentment of union members' salaries and benefits run strong in Antofagasta, a dusty Pacific-coast port town of 300,000, 170 kilometers northwest of the mine, Pablo Diaz, a non-union mine worker, said in an interview on Aug. 25.

``While people like us don't have enough money to buy a microwave oven, these strikers are driving around in brand-new four-wheel-drive trucks,'' Diaz, 28, a contract worker at the mine, said as he relaxed on a bench in the Plaza Colon, the main square of Antofogasta, where most Escondida workers live. ``They're too greedy.''


Placer Dome

Previous labor disputes at Chilean copper mines have been short lived. Contract employees at state-owned Codelco, the world's biggest copper producer, returned to work after a 17-da strike at El Teniente and Andina mines in January. Placer Dome Inc.'s 500 workers at the Zaldivar copper mine ended an eight- day strike in July 2005 after the company sweetened a wage offer.

The striking miners earn about 1 million pesos ($1,866) a month, three times what Diaz makes as a non-union employee, and he doesn't get the bonuses, health-care insurance, housing subsidies, and interest-free loans union members enjoy as part of their contract with BHP, the world's largest mining company.

Jose Luis Arce, 34, who works for a subcontractor at BHP's Spence Copper mine, also in Northern Chile, said he has worked 20 days of 12-hour shifts in a row with only 10 days off, earns 500,000 pesos a month and gets no benefits. Diaz works seven days and has seven days off. Union miners work on a four-day cycle. The mine hasn't started production.

``We don't even get healthcare,'' Arce said in an interview in Antofagasta. ``I'd gladly take a job at Escondida.''


Pool, Theatre

The union's strike headquarters, where the vote is scheduled to take place, sparked hostility, too. Workers have occupied BHP's community center, an annex to the company's regional headquarters that boasts a pool, theatre and sports facilities, and set up tents in the parking lot where more than half the vehicles are four-wheel drive pickups.

The surrounding fence is festooned with union flags and protest banners with such slogans as ``bloodsucker, let go of the $''. At night, behind the barricades, strikers can be seen playing tennis on well-lighted clay courts.

``Are they on strike or vacation?'' asked Jessica Castillo, 34, a mother of four as she watched her 12-year-old son play soccer at a small sand-pitch stadium beside rail-yards full of copper plates.

During the strike carloads of young men would drive past the protest site shouting obscenities at the strikers and calling on them to ``go back to work.''

Carlos Allendes, 43, a striking dump-truck driver and his comrades on the picket line make no excuses for their demands, salary or benefits. The miners' agreed to their three-year contract when the price of copper was 80 cents a pound, he said. Copper which fell to $3.35 a pound yesterday, reached an all- time high of $3.92 a pound on May 11.

China to Launch Commodity Pricing System


BEIJING, Aug 31, 2006 (AP Online via COMTEX) -- China will have its companies carry out unified price negotiations with foreign suppliers of oil, copper and other commodities to get better deals, a government newspaper said Thursday.

The system will draw on China's recent experience in trying to negotiate lower prices with foreign iron ore suppliers, the Economic Daily said, citing Wei Jianguo, a deputy commerce minister.

The report said the system would be launched as soon as possible but didn't give a timetable or details of how the system would work.

China is one of the world's biggest importers of oil, iron ore and other raw materials.

"In terms of imports, we are big buyers, but we lack the ability to set international prices," Wei was quoted as saying.

Copper scarcity has led to price rises over the past couple of months.
Therefore, expect a downturn in metal prices when official notification
of end-of-Escondida-strike hits the newswires later today and production
rate returns to normal.

It would be advisable to offload metals until after the dust has settled
later today and come back tomorrow to review the situation.