Strikes raise metal prices

Strikes raise metal prices

LONDON (AFP): Strikes in several copper and nickel mines
around the world sent a shiver of excitement through the market,
which was still awakening from a sleepy summer, and drove the
price of these metals higher last week.

Some traders fear that the stoppages at copper mines in Chile
and Namibia will cut into world production, which was expected to
expand strongly later this year.

A walk-out at a nickel mining complex in Canada also threatens
to reduce output of this key metal, used to make stainless steel.

Strike action in several mines around the world has prompted
fears on the London Metal Exchange (LME) of a disruption to
global supplies.

Prices, as a result, have been driven higher. Three-month
copper prices rose by US$30 to $1,965 per ton.

The main source of concern is in Chile, where employees at the
state-owned Codeldo's Salvador mine stopped work from Friday, in
protest at a management restructuring plan.

Salvador, with an annual output of 85,000 tons a year, is the
smallest mine run by Codelco, which is the world's biggest copper
producer.

The market fears that the stage is set for a long strike, with
the management apparently determined not to give way in the
dispute.

Strike action has also put the Tsumeb smelter in Namibia out
of action. The owner, Gold Fields, has admitted that there might
be a lengthy shutdown.

Another dispute could take place at a mine in New Mexico owned
by Phelps Dodge, where unions are resisting the latest management
pay offer.

Analysts, however, are divided on the impact of these labor
disputes. Some say that the copper market is swiftly moving
towards a period of large surpluses (because of rising
production) and the strikes will have a minimal effect.

But other experts believe the loss of output could delay the
arrival of these growing surpluses.

An increase in US construction activity helped prices to firm.
Copper is used a lot in the building industry, to make pipes and
cables.

At the end of the week, a smaller-than-expected rise in LME
stocks (up 3, 600 tons to 275,275 tons) gave added impetus to the
market.

Nickel prices were hard. A vote in favor of strike action at
the Thompson mining complex in Canada owned by the giant Inco
company drove up the price of this metal, used to make stainless
steel.

The three-month reference price gained $100 to reach almost
$7,500 per ton. Traders fear that the shutdown of this complex in
Manitoba, which produces 45,000 tons of nickel a year, will
affect supplies on the market.

The price of tin rose by $80 to $6,240 per ton, with LME
stocks up 20 tons at 10,725 tons.

According to the Economist Intelligence Unit, consumption of
tin will grow strongly in the next few years, after the decline
seen in past years, as tin is increasingly used once again to
make drink cans.