Copper climbs as world's top two mines prepare to cut output

Copper prices rose on Wednesday after the world's top two mines said strikes and permit delays would force them to cut output, squeezing global supply. BHP Billiton began to halt production at Escondida in Chile, the world's biggest copper mine, ahead of a strike set to begin on Thursday.
The company has said it could not guarantee the safety of the 80 workers the government had authorized to remain at the mine to perform "critical duties", such as equipment upkeep and adherence to environmental protocols.
Freeport-McMoRan Inc meanwhile warned it would scale back activities at its Grasberg copper mine in Indonesia due to labour unrest. The company has also said it would cut production if it did not receive a new export permit by mid-February.
Three-month copper on the London Metal Exchange closed up 1.7 percent at $5,895 a tonne, erasing a decline of 0.9 percent in the previous session.
"Our view is that the copper market will continue to tighten over the course of this year and supply disruptions are part of that view," said Daniel Morgan at UBS in Sydney. "We are looking for $3 a pound ($6,614 a tonne) for this year." Escondida produced 1.15 million tonnes of copper in 2015, about 6 percent of the world's total.
Analysts at Goldman Sachs said a 20-day strike at Escondida and a one-month delay in Grasberg's receipt of an export permit would cause lost output of almost 100,000 tonnes. That would exceed the expected global surplus of 80,000 tonnes this year according to a poll of analysts by Reuters.
In other metals, nickel finished up 1.5 percent at $10,500 a tonne after earlier touching $10,545, its highest since Jan. 11. Nickel prices have risen more than 12 percent since Jan. 27 as the Philippine government ordered the closure of 23 mines following an environmental audit. But the final impact of the audit on nickel supply is unclear, said Citi analyst David Wilson.
Miners have demanded to see the findings after it emerged that auditors recommended suspensions and fines rather than closures, and the government said on Wednesday that mines facing closure could appeal. Tin closed up 0.5 percent at $19,025 a tonne, halting four days of falls.
The soldering metal had dropped almost 12 percent since Jan. 19 as supply concerns were eased by talk that China had abolished a 10-percent export tax on refined tin exports and higher inventories in LME-approved warehouses. Industry group ITRI on Wednesday confirmed that China had lifted the tax but said there had not been a significant rise in shipments from the country. Aluminium closed 0.7 percent higher at $1,848.50 a tonne. Zinc rose 1.9 percent to $2,848 and lead ended 1.9 percent higher at $2,389 a tonne after touching a two-month high of $2,403 earlier in the session.