Copper climbs as BHP Billiton says strike to hit production at world’s largest mine
Copper prices climbed over 1 percent on Wednesday morning in Asia after global miner BHP Billiton said it planned to halt production at the Escondida mine in Chile due to a workers strike.
According to Reuters, production will stop at the world largest copper mine during a strike schedule to being on Thursday. The mine produced 6 percent of the world's copper in 2015.
Benchmark three-month copper futures on the London Metal Exchange rose as much as 1.5 percent to $5,894.5 per metric ton and were trading around $5,872.5 at 2.15pm HK/SIN time. They are still off a two-month top of $6,007 a tonne reached on Feb. 1.
David Lennox, resources analyst at Fat Prophets, said prices of commodities now are prone to short-term shocks such as strikes as capital expenditure has been slashed following a sustained and broad-based slump across the complex since the summer of 2014.
"Projects that were supposed to come on-stream haven't been. That does mean that supply is getting a bit tighter and demand is increasing closer to those supply levels," Lennox told CNBC's "Capital Connection".
China is the world's largest consumer of the red metal, with international prices recently up on prospects of a supply disruption. It is used in a wide range of products and industrial applications.
The impending strike comes as the main union at BHP Billiton's Escondida copper mine said negotiations mediated by the Chilean government with the company have failed, Reuters reported.
"The company doesn't want to change its position, so we understand that there is nothing left to negotiate ... there is nothing left to talk about, we've already talked a lot and we are definitely going on strike," said union spokesman Carlos Allendes.
Escondida is majority-controlled by BHP, with Rio Tinto and Japan's JECO also holding stakes.