Political Risk Latin America Blog @PolRiskLatam

Chile mine strike raises fears for copper supply

Posted in News and Articles, Political Risk by politicalrisklatam on July 27, 2011

by Javier Blas for Financial Times, July 26th, 2011.

Copper prices rose on Tuesday as a strike at the world’s largest mine of the metal entered its fifth day, stoking worries of a stalemate which could reduce supplies.

The Escondida mine, located in the Atacama desert in Chile, accounts for around 7 per cent of global copper production. Although the strike has been, so far, too short to have a meaningful impact on physical copper markets, investors and traders worry that the lack of negotiations between the miners and the company could lead to a prolonged outage and potentially extend to other mines.

RBC Capital Markets said in a note to clients that the strike was providing some support to the copper market, but warned: “These industrial actions are generally short lived.” Investors are, however, worried that the strike could continue.

The operator of Escondida said the company would not engage in talks with the miners, which are demanding higher bonuses and salaries after a rally in copper prices of 32.7 per cent since January 2010, until they stop the strike. The miners have requested a second-round of government-mediated negotiations. (continue reading… )

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