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The copper market is getting a boost from disruptions at two of the world’s largest copper mines.
The price of copper rose 2 per cent Wednesday after miner BHP Billiton said it would halt output at its Escondida mine in Chile after unions voted to start striking on Thursday. At the same time, reports said Freeport-McMoran would reduce output at its Grasberg mine in Indonesia as the miner awaits government approval for exports of its copper after the expiration of a permit last month.
Together the two mines were set to produce 9 per cent of world copper mine supply this year, according to Goldman Sachs.
“Downside risks to supply appear increasingly likely to materialise and translate into copper production losses,” said analyst Max Layton.
Copper traded on the London Metal Exchange rose to a high of $5,925 a tonne on the news. The metal has rallied 22 per cent since Donald Trump’s election last November on hopes for a boost in infrastructure spending.
The previous strike at Escondida. in 2006, lasted 25 days, according to Standard Chartered. They estimate that 3,400 tonnes of copper could be lost for each day of the strike.