Categories: Base Metals / Energy / General Market Commentary
Topics: General Base Metals / General Energy / General Market Commentary

Copper price surges on BHP force majeure

Copper price surges on BHP force majeure

In New York  on Friday copper for delivery in March jumped by more than 4% to $2.7710 per pound or $6,100 a tonne after BHP Billiton declared force majeure at its Escondida mine in Chile.

Copper is now trading at its highest level since late May 2015 with year-to-date gains of just under 10%. BHP confirmed on Friday it could no longer meet contractual obligations on metals shipments from the mine, the world's largest copper operation by a wide margin. 

Striking workers also blocked roads at the Coloso port, where hundreds of thousands of tonnes of copper are shipped annually
Some 2,500 workers at Escondida walked off the job on Thursday and all indications are that the union is preparing for an extended fight over wages and benefits reports Reuters:

At a camp near the mine, protesting workers settled in for the long haul, equipped with stockpiles of gas cylinders, portable cookers and tents to weather the Chilean high desert's scorching sun and frigid nights.

Escondida's processing plants, which had begun going offline on Wednesday, are now completely stopped, the union added.

Striking workers also blocked roads at the Coloso port, where hundreds of thousands of tonnes of copper are shipped annually.

BHP Billiton operates and majority owns the mine with fellow Melbourne diversified giant Rio Tinto. The previous labour deal was signed four years ago when copper was trading around $3.40 a pound. CNBC quotes investment bank Macquarie as saying the Escondida strike could last one to two weeks, cutting global supply by as much as 45,000 tonnes.

In its financial results released last week BHP expected full-year production at Escondida of 1.07 million tonnes, which gives the mine a nearly 5% shares of global primary copper production. BHP also cut full year guidance by 40,000 tonnes to 1.62m tonnes

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