LONDON: Copper slipped into the red on Tuesday on hopes strike talks would restart at the world's biggest copper mine in Chile while aluminium touched its highest in 21 months on renewed concerns about potential closures of Chinese smelters to cut pollution.
Also pressuring base metals was a stronger dollar, which rebounded after Federal Reserve Chair Janet Yellen said it would be unwise to wait too long to raise US interest rates.
Benchmark copper on the London Metal Exchange was down 1.2 percent at $6,030 by 1547 GMT, pulling back from a session high of $6,190 and after hitting its highest since May 2015 on Monday at $6,204.
Striking workers at BHP Billiton's Escondida copper mine in Chile, the world's biggest, have agreed to enter into a government mediation process with the company, a government spokeswoman said on Tuesday, as the strike entered its sixth day.
Traders said the news hit a market worried that funds who have taken bullish positions might be ready to sell on any signal that the strike may be concluded.
"The markets are very nervous and when it looked like someone sold a large amount, that just swept the market down. Any move down will attract some panic sellers," a trader in London said.
There was no guarantee, however, that the two sides would make progress in the mediation. "There's quite a wide gap between what workers are wanting and what BHP is offering," Warren Patterson, commodities strategist at ING in Amsterdam, said.
Offering some support to copper were persistent supply issues in Indonesia, where an export ban remained in place.
Freeport-McMoRan Inc has halted production of concentrate at Grasberg in Indonesia, the world's second-largest copper mine, in a long-running dispute over investment guarantees.
Aluminium was the only LME metal remaining in positive territory, rising 0.7 percent to $1,884.50, after touching a session peak of $1,907, a high since May 13, 2015.
In a sign of growing public anger about pollution, hundreds of residents in a northeastern Chinese city protested against the building of an aluminium processing plant.
This came a day after Reuters reported a draft policy document showed that the world's biggest metals consumer was considering forcing steel and aluminium producers to cut more output as Beijing intensifies its war on smog.
"If the proposed measures are applied this should impact a significant proportion of current China steel and aluminium output," Alastair Munro at broker Marex Spectron said in a note.
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