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Copper price to feel spike of aftershock

Copper price to feel spike of aftershock
By Reuters
Mon 01 Mar. 2010, 17:20 CAT

The price of copper is likely to soar this week,lifted by uncertainty over supply after the world's top copper producer, Chile, was pounded by a massive earthquake on Saturday.

The quake forced temporary suspension of as much as a fifth of Chile's mining capacity - estimated at about 4.5 million tons of copper annually - after Codelco and Anglo American halted operations at four mines.

Analysts expect prices to rise because of the possible disruption of infrastructure, power and transportation to the mines.

"While it appears that a modest proportion of production has been halted, the major impact may come from the disruption of deliveries from the mines, and from the disruption of power supplies to the mines," said Citi analyst David Thurtell.

"Transportation will be affected by damage to highways and from a lack of fuel. The country's main highway has been severed and bridges destroyed. Mine workers' apartment buildings may have been destroyed," Thurtell said.

State miner Codelco halted operations at its El Teniente and Andina mines, which had a combined annual output of 614000 tons last year.

Chile's mining minister, Santiago Gonzalez, said it could take two days for production to resume. Other Codelco mining operations were unaffected.

Anglo-American's Los Bronces and El Soldado mines, which together produce about 280000 tons of copper annually, also halted operations, but other major mines were running as usual.

Most of Chile's mining industry is based in the north of the country. The quake struck in central Chile, 115km northeast of the city of Concepcion.

Many of the more distant mines rely on diesel to power generators to provide electricity. Disruption to supply - either due to problems at the oil refineries near the epicentre of the quake or because the fuel is being diverted to help the relief effort - could have implications for output.

The earthquake also damaged two oil refineries run by state oil company ENAP, and one official said diesel imports were being stepped up to ensure there were no shortages.

Labels: CHILE, COPPER, EARTHQUAKES

posted by MrK @ 6:02 AM