Copper, nickel prices likely to be hit by El Niño event

Despite earlier predictions of a tame 2015 El Niño event, the one currently under way in the tropical Pacific could become a “substantial” event later in the year, said the body Tuesday.

“This is a proper El Niño effect, it’s not a weak one,” David Jones, manager of climate monitoring at the Australian weather agency, told reporters according to AFP. “There’s always a little bit of doubt when it comes to intensity forecasts, but across the models as a whole we’d suggest that this will be quite a substantial El Niño event.”

The phenomenon, which occurs every two to seven years, is known to bring crippling drought conditions to Australia and monsoons to parts of Southeast Asia, which can devastate economies and disrupt global agricultural markets.

(Graphics courtesy of US Meteorologist Joel Gratz)

Mining is not immune to El Niño. In the past, droughts in Indonesia, a top nickel and copper producer, have led to output drops as hydroelectric power facilities were affected, as were the water levels of inland waterways used for ore transportation. In Peru, heavy rains flooded into zinc mines, triggering price spikes.

The same happened recently in Chile, whose copper-rich north was hit by torrential rains and floods, causing producers to cut output forecasts and prices to jump.

First observed in the 19th century fishermen in Peru, the recurring weather phenomenon — a warming of the Pacific Ocean as part of a complex cycle linking atmosphere and ocean — has in the past affected Australasia as well South America. Its climactic can reach as far as West Africa.