Copper futures rose to the highest in almost two weeks on prospects for reduced supply as the world’s second-biggest mine remained closed following deadly accidents.
Freeport-McMoRan Copper & Gold Inc.’s Grasberg mine in Indonesia will be shut for as long as three months while the government holds an investigation. Closing the mine for the entire period would remove about 140,000 metric tons of copper supply, according to Macquarie Group Ltd., about 20 percent of the investment bank’s disruption allowance for 2013.
“The potential for an extended shutdown at the giant Grasberg mine has helped lend support to copper prices,” Leon Westgate, an analyst at Standard Bank Plc in London, said in a report e-mailed today. “The most immediate impact will be felt on the concentrate market.”
A tunnel collapse at Grasberg on May 14 killed 28 people, and another worker died June 1 in a separate incident. A landslide in April reduced production at Rio Tinto Group’s Bingham Canyon mine in the U.S., and output at Chile’s Collahuasi also is limited. Vedanta Resources Plc, controlled by billionaire Anil Agarwal, said on May 24 that its Konkola Copper Mines unit in Zambia plans to cut 24 percent of the workforce.
As a result, copper supply is set to be curbed in what is normally a seasonally strong period for demand, according to Goldman Sachs Group Inc. The metal will trade at $8,000 a ton in six months, the bank predicted.
BHP Billiton Ltd.’s Escondida site in Chile is the world’s largest copper mine.
On the London Metal Exchange, copper for delivery in three months climbed 1.6 percent to $7,455 a ton ($3.38 a pound), the biggest gain since May 8. Aluminum, nickel, zinc and lead gained, while tin dropped.