Copper to Hit $5.15 in 2011

Shayne Heffernan has raised his estimate on the Copper shortfall in 2011 to 700,000 tons, and expects December copper prices above $5.15 a pound as workers at some of the world's biggest copper mines in the world have also staged strikes of their own to demand a bigger share of windfall copper profits. Workers at BHP Billiton's Escondida, the world's largest copper mine, halted a two-week strike earlier this month that stoked global supply fears.

Copper and Gold prices will increase as supply dwindles.

Chile's Codelco experienced its first strike in two decades as its workers, fearful of the government privatising the company, are demanding a say in company restructuring. As if mine work disruptions in Chile, which had a share of 38.2 per cent of global copper exports, due to agitations by workers were not enough, Collahuasi, the world's third-largest copper mine, was paralysed for some time by heavy snowfall.

Copper producers in Africa have faced demonstrations by workers. A Chinese-owned mine in Zambia was shut for two days in March, with workers demanding pay rise. All this has led Macquarie to say in a research note that "if we continue to get the same run rate of disruptions for the remainder of the year, we would have about 1.1 million tonnes of disruptions in 2011. The indications are that copper supply growth will indeed be meagre in 2011."

Copper Strike Timeline

July 21, 2011: union workers at Chile's Escondida mine strike to demand bonuses to offset lower output level compensation.

July 11, 2011: thousands of Codelco union workers staged a company-wide strike for one day to demand a bigger say in the state-run miner's restructuring plans.

July 2011: workers at Freeport-McMoRan Copper & Gold's ( FCX ) Indonesia mine strike for eight days demanding a pay increase.

May-June 2011: violent protests by thousands of contract workers at Codelco's El Teniente which forces miner to slash output.

April 2011: Grupo Mexico's giant Cananea copper mine was 90 percent ramped-up after a strike that began in July 2007 closed the mine and cost the company roughly $3.5 billion.

March 2011: more than 600 workers at Zambia's Chambishi copper smelter striked for two days, demanding a pay increase.

December 2010: a 32-day strike ended at Collahuasi, after workers accepted a wage deal.

September 2010: a week long labor dispute occurred between Grupo Mexico and the national miners' union

In Indonesia

Freeport-McMoRan Copper & Gold Inc., NYSE:FCX workers plan to stage another strike at its Grasberg mine in coming days after a deadlock in talks with the company's management, a union official said today.

The union's deadline for a pay deal was Friday, though a Freeport spokesman said the firm still expects to extend the talks to avoid a second strike at the mine within two months.

Around 8,000 workers in July held an eight-day strike at Grasberg, which has the world's biggest reserves of gold and biggest recoverable reserves of copper, causing a production loss of 60,000 ounces of gold and 35 million pounds of copper.

The July strike at the Grasberg mine and other worker-related disruptions at mines in Chile boosted copper prices to a three-month high.

"The talks are deadlocked. The gap between what we wanted and what the company offered was enormous. They think a bonus is considered a rise, for us a pay rise is a pay rise," union official Virgo Solossa told Reuters.

The workers returned to the remote mountain mine in Papua after the U.S. firm agreed to bring forward pay talks that had been scheduled for later this year and to not penalise union leaders. But the key issue of pay level was left unresolved.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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