Two worlds’ major copper mines are shut impacting the global copper prices. Freeport’s Grasberg copper concentrate mine in Indonesia have stopped the production ore the export ban rules by the government. The company is currently not producing since the January 2017. Last year, the mine produced 670,000 tonnes of copper ore.
Another mine facing shutdown is Escondida copper mine largest in the world producing 1.1 million tonnes of copper in 2016 representing more than 19% of Chile’s production of copper. Strike happened on demands over salary hikes and bonus issues. The mine produces some 5% of the global supply of copper. Every week the mine loses 25,000-30,000 tons of copper ore. A government-mediated meeting between BHP Billiton and workers at Escondida mine failed to find common ground yesterday, continuing the strike.
Together both the mine produces 1.7 million tonnes of copper. One-month shutdown at both these mines would remove about 140,000 tonnes, or 0.7% of the world’s output this year.
Global copper ore supply is likely to fall in 2017. More salary negotiations and strikes are likely in 2017 as many contracts between workers and copper mines will expire. Labour contracts amounting to 14% of production are up for renewal this year. The possibility of copper supply disruptions in 2017 is increasing, at a time of robust Chinese demand, has pushed up prices recently.
CommTathya expects copper prices to remain firm in 2017 on stable growth in China, higher new loans, stronger US growth backed by Trump new infrastructure spending and lastly supply disruption issues in copper during the year.