El Salvador lawmakers overturn mining ban Bukele called absurd
El Salvador became the first country in the world to ban all forms of metals mining in 2017.
On Tuesday copper for delivery in March closed more than 2% higher in New York at $2.7085 per pound or just under $6,000 a tonne. It was the highest close since June 2015 and in after hours trade the metal added to gains, last trading at $2.72.
Copper has advanced 40% since hitting near-six year lows this time last year, with most of those gains coming in the last four months.
Copper’s latest leg up was spurred by worries over a possible production outage at the Escondida mine in Chile. Majority owner and operator BHP Billiton expects full-year production at Escondida of 1.07 million tonnes, which gives the mine a nearly 5% shares of global mine production.
The current collective agreement with the main union at the mine expires at the end of January and according to a Reuters report workers have rejected BHP’s latest revised offer and union leaders have told members “to vote for a strike and prepare for an extended conflict.”
The previous labour deal was signed four years ago when copper was trading around $3.40 a pound. Given Escondida’s size a prolonged outage could have a meaningful impact on the price.
BHP’s copper production for the half year to end December fell 7% to 712,000 tonnes due to a power outage at its Australian Olympic Dam operations in September-October. BHP also cut full year guidance by 40,000 tonnes to 1.62m tonnes.
Chile produces 28% of the world’s copper and the country’s output dropped by 3.9% in 2016, mainly due to lower production at Escondida and Anglo American Sur.
Production in the South American nation is expected to grow by 4.3% according to the Chilean government forecaster adding that Escondida would account for almost all of the expected increased output.
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