- Copper prices continue to climb, hitting a four and half year high above $7.3K/metric ton thanks to a weaker U.S. dollar, the closure of a big Indian smelter and fears of a strike at the Escondida mine in Chile that could hurt production.
- Copper has surged 7% this week since the main union at Escondida - the world's biggest copper mine - delivered a pay request to owner and operator BHP Billiton (LON:BLT) (BHP -0.4%) that suggests difficult negotiations.
- BHP lost $1B in revenue during a 44-day strike at Escondida last year, but BHP has "indicated previously that it seeks to protect the long-term value of the asset,” says Investec analyst Hunter Hillcoat. “Submitting to aggressive wage demand now, which will only escalate in future years, has the potential to damage the long-term value of the mine.”
- BHP and partner Rio Tinto (LON:RIO) (RIO -1.2%) have invested billions of dollars in Escondida over the past five years, and they must raise production and cut costs to secure a return on that investment.
- Shares of copper producers Freeport McMoRan (FCX +0.5%) and Southern Copper (SCCO -1.1%) have gained 7.7% and 7.5%, respectively, over the past four trading sessions.
- ETFs: JJC, CPER, CUPM, COPX
- Now read: Freeport-McMoRan: Strong Potential
Original article