Copper up as RI strike seen cutting supplies<\/p>\n
LONDON (Bloomberg): Copper climbed as much as 1 percent
\nyesterday, to its highest in four days, after Freeport-McMoRan
\nCopper & Gold Inc. said a labor dispute at its Grasberg mine in
\nIndonesia could force it to miss deliveries.<\/p>\n
All mining at Grasberg, the world's second-biggest copper
\nmine, has been suspended for four days after 5,000 miners went on
\nstrike, demanding higher wages.<\/p>\n
If the strike continues, it will reduce already lean global
\nsupplies of copper concentrate, particularly to Japan, the
\nworld's second-largest copper user after the U.S., analysts said.<\/p>\n
\"The copper concentrate market is already tight,\" said James
\nMay, a metals analyst at Metal Bulletin Research Ltd. in London.<\/p>\n
\"This will exacerbate that tightness, particularly in Japan.
\nIf it appears that the strike is spreading and that it's
\nsustained, then you could have a spike in prices.\"<\/p>\n
Copper for delivery in three months rose as much as US$16 to
\n$1,643 a metric ton in electronic trading on the London Metal
\nExchange, its highest price since Aug. 10.<\/p>\n
Freeport said it declared a \"force majeure\" this week at the
\nmine, even though it is continuing to ship concentrate from its
\ncopper stockpiles at Grasberg. Copper concentrate from the mine
\nis mainly shipped to Japan and to Freeport's operations in Spain,
\nMay said.<\/p>\n
Declaring a force majeure removes Freeport's contractual
\nliabilities if unforeseen events mean it is unable to meet its
\ncontract conditions.<\/p>\n
The company has declined to say how many weeks worth of
\nconcentrate -- crushed rock containing copper, gold and silver --
\nit has in stock, saying only it expects the strike will be over
\nbefore stockpiles run out.<\/p>\n
Force majeure<\/p>\n
In Jakarta, Freeport said it declared a \"force majeure\" this
\nweek in a warning to customers that a strike at its Grasberg mine
\nin Indonesia could force it to miss deliveries.<\/p>\n
The warning comes even though the company continues to ship
\ncopper concentrate from stockpiles at Grasberg, the largest
\ncopper and gold mine in the world.<\/p>\n
Freeport said it had to declare force majeure within 48 hours
\nafter the strike started to protect itself from claims by
\ncustomers if deliveries are cut at a later date.<\/p>\n
Force majeure remove a company's contractual liabilities if
\nunforeseen events make it unable to meet contract conditions.<\/p>\n
\"The way our sales contracts are set up, if we are going to
\ndeclare force majeure we have to do it within 48 hours of the
\nincident,\" a Freeport spokesman said.<\/p>\n
He said the declaration is insurance against the strike
\ndragging on. \"If we got three weeks down the road and ran out of
\nconcentrate we couldn't declare force majeure.\"<\/p>\n
All mining at Grasberg has been suspended for the past four
\ndays after 5,000 employees went on strike, demanding higher
\nwages.<\/p>\n
Freeport has declined to say how many weeks worth of
\nconcentrate -- crushed rock with high levels of copper, gold and
\nsilver -- it has in stock, saying only it expects the strike will
\nbe over before it runs out. Analysts estimate the company has
\nbetween two weeks and a month's worth of concentrate on hand.<\/p>\n
The Grasberg mine, majority owned by Freeport, is also part
\nowned by former Indonesian President Soeharto, the Indonesian
\ngovernment and Rio Tinto Plc The company ships most of its
\nconcentrate to a refinery it owns in Spain, and some to Japan and
\nother countries.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/copper-up-as-ri-strike-seen-cutting-supplies-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}