Kansanshi produced about 230,000 tonnes of copper and more than 100,000 ounces of gold in 2010. First Quantum is looking to raise output capacity there from 250,000 tonnes to about 400,000 tonnes per year by the end of 2014. The expansion will be carried out in two parts with the first stage expected to lift production capacity to about 285,000 tonnes a year.

Mr Clive Newall president First Quantum said that the company was planning investments in Zambia of up to USD 2.5 billion over the next 4 years on top of USD 1 billion already invested. The miner swung back to a profit in the Q2 from a year ago loss but came in short of some analysts’ forecasts after a drop in production.

Copper prices have fallen back to around USD 9,100 per tonne after hitting a record USD 10,190 per tonne in February. Still, some analysts say robust Asian demand and a threat to supplies will keep copper price falls relatively modest over the next few months, regardless of the volatility that has whipped global financial markets on rising fears of a recession in Western nations.

Further, precious metals will contribute an average of 44% to the mine’s revenue for the first five years if current prices hold.

Gold surged to new record highs, approaching $1 900/oz on Monday, while silver climbed to $43.58/oz.

“Revenues from gold and silver will have a significant positive effect on lowering the average cash cost to produce a pound of copper during the first five years of mining at Oyu Tolgoi,” Ivanhoe CEO Robert Friedland said in a release.

The company plugged a $1,850/oz gold price, $42/oz for silver and US$4.00/lb copper price into its May 2010 integrated development plan to determine negative total cash costs of $0.07 to produce a pound of payable copper in the first five years of production.

Ivanhoe announced earlier this month that it had started pre-stripping at Oyu Tolgoi’s phase-one open pit.

The mine is expected to produce 650 000 oz of gold, three-million ounces of silver and 1.2-billion pounds of copper yearly in its first ten years of commercial operation, with initial output in late 2012.

Ashok Mittal, CEO of Emkay Commodities said that copper should have a good support at Rs 399 per kg levels because that level has not broken yet. He thinks that buying copper near Rs 399-400 per kg should be a good idea with stop loss below Rs 396 per kg. “On the higher side, we can expect target between Rs 410-412 per kg levels,” recommended Mittal.

Rajini Panicker, head of commodities research at MF Global Commodities India advises to go short the MCX August copper contract at levels of Rs 408-409 per kg, placing a stop for the trade at Rs 412 per kg, targeting levels of Rs 398-397 per kg.

Kunal Shah, research analyst – commodities at Nirmal Bang Commodities said, “In the non-ferrous complex, copper looks very bearish to me. I look to sell copper between Rs 401-Rs 402 per kg with a stop loss of Rs 406 per kg and expect prices to drift lower and test levels of Rs 390- Rs 388 per kg in a day or two.”

He also remains bearish on Lead. He plans to sell lead at Rs 106 per kg with a stop loss at Rs 108 per kg. “Expect prices to drift lower and test Rs 103-Rs 103.50 per kg.” he warned.

Kishore Narne, vice president at Anand Rathi Commodities said, “One can look to buy nickel at Rs 960-Rs 970 per kg with stop loss around Rs 945 per kg and look for targets close to Rs 1008- 1010 per kg levels.

Bell Equipment , which posted a net loss of R372m for the financial year to March , said the increase in the copper price, and the resultant surge in mining, meant a major increase in the use of its materials- handling equipment. The company is operating in the Democratic Republic of Congo.

CEO Gary Bell said that the copper mining sector provided “growth and long-term stability” for the company. The downturn saw Bell’s revenue fall by more than half in the year to December, from R5,46bn in 2008 to R2,7bn last year. It posted a net loss of R372m, from a profit of R514m.

“As the copper price is the lead indicator of economic recovery, it is safe to say that those companies experiencing the benefits of the high price are also recovering,” said Econometrix Treasury Management MD George Glynos yesterday.

Copper production increased due to demand from China, which consumes 45% of the world’s copper.

South African companies working in the Copper Belt in the Congo and Zambia benefited from this consumption as these African countries were important copper suppliers . This was owing to the low reserves of copper in large producing countries such as Chile, Peru and the US.

While SA’s heavy equipment suppliers to mines would feel the positive effects of a high copper price, other South African companies, especially those focusing on electronics and electrical equipment, suffered. These included electrical engineering company Reunert . “When the copper price increased, the rand increased, which puts manufacturing firms at risk,” said CEO Gerrit Pretorius.

The global copper price hit a high of 7900 a ton in April, and although the price had softened this quarter, it was expected to remain high for the next few years, said a mining analyst.

However, the analyst warned that copper was a volatile commodity, with prices anticipated to come down again in 2013. The analyst speculated that the demand from Western Europe and the US would start to slow in the next few years owing to a decline in infrastructure development.

Meanwhile, apart from the buoyant copper price, the industrial metals sector is expected to stay on a recovery path this year. Demand for such metals was expected to be stimulated by lean producer inventories , government stimulus programmes and Chinese consumption, analysts said. Global economic growth is starting to pick up as a result.

BMO Capital Markets global commodity strategist Bart Melek said that global industrial production was recovering from a 12,5% decline last year to a 3,2% rise this year .

Taseko will receive the prevailing market copper price while it is within the price range. Should the market price be outside the price range, Taseko will receive a minimum of US$2.50 and a maximum of US$3.95 per pound for the hedged copper. Remaining production from Gibraltar is unhedged.

Taseko recently raised C$180 million by selling 25% of the Gibraltar mine to Sojitz Corp. of Japan. Capacity is being expanded to 30,000 t/d.

Kevin Norrish of Barclays Capital told an African mining conference in Cape Town there would be no material growth in copper supply this year.

He projected copper supply growth at 7 percent, but various disruptions to production would keep supply in check.

Norrish said he was bullish that the copper price would hit highs of $8,500 per tonne in 2012 owing to supply constraints.

“If we are going to see a surpirise this year, the surprise is going to come from demand… indicators are pointing to a stronger OECD demand rebound,” he said.

Copper fell to a two-and-a-half month low on Monday, as strong economic data heightened investor concerns that China, the world’s top metals consumer, may further tighten monetary policy.

ARM was also looking at acquisitions in the rest of the continent and had formed a joint venture with Vale to explore for copper in Zambia, while also looking at the Democratic Republic of Congo, Namibia and Mozambique.

“We are certainly on track for the first phase and the second phase (expansion) and see full production at the end of the year 2012, from 10-million tons per annum to 16 [mtpa],” CEO Andre Wilkens told Reuters on the sidelines of an African mining conference.

Wilkens said his board would consider the Konkola North copper mine project later this year before announcing its terms, although it looked viable at this stage.

“The long-term copper price looks much stronger now than 18 months ago so it certainly makes that project viable,” he said.

ARM produces platinum, nickel, iron ore, manganese ore and coal, among others.

Wilken said the company intended to spend around R8-billion over the next two years, including this financial year, as it ramped up production and sought to make acquisitions in the rest of the continent.

“We are looking specifically at platinum in Zimbabwe to see what we can achieve there,” he said.

Zimbabwe, which has large undeveloped platinum reserves, is struggling to boost investments in its mining sector following years of neglect prompted by political violence and an economic collapse in the southern African nation.

Its indigenisation process, which aims at nationalising mines, has also caused consternation among investors and large mining companies, with Rio Tinto on Tuesday saying this remained a concern.

But Wilkens said ARM would invest in Zimbabwe if it made business sense.

“If we are able to get the license or the ownership of a sizeable ore body that makes a good business case we will go there,” he added.

Lu Youqing, vice-president of Aluminium Corp of China (Chinalco), said that the state-owned group was studying worldwide copper resources to identify the best investment opportunities.

“Copper is our next main development target,” Mr Lu said in an interview with Reuters, citing Toronto-listed Ivanhoe Mines’ copper-gold project in Mongolia as a potential target. Mr Lu declined to comment on the amount of money that Chinalco has earmarked to make such purchases, however, he said the company is yet to enter talks with any potential sellers.

Copper prices have surged by 130pc since the start of 2009, with the aluminium price up a more modest 44pc, The positive outlook for copper prices prompted Chinalco to establish a subsidiary last year, China Copper Company. The unit now has about 60bn yuan of assets, but there are no imminent plans to list the business separately, Mr Liu said.

In June last year, Rio Tinto spurned Chinalco’s proposed $19.5bn cash injection, which would have doubled the Chinese group’s stake in the miner to 18pc. Instead, Rio undertook a deeply-discounted rights issue and put its Australian iron ore assets into a joint venture with BHP Billiton. Yesterday, the European Union launched an antitrust probe into the proposed iron ore venture, which had been widely expected.

Chinalco currently owns 9pc of Rio Tinto and Mr Lu also denied the recent rumour that the company was about to sell its stake to China Investment Corp, China’s sovereign wealth fund.

Chinese companies spent more than $30bn buying foreign mines and oil deposits last year, as asset prices tumbled. Analysts are generally downbeat on prospects for the aluminium price, but more bullish on copper.

Chinalco also said yesterday that it had posted a profit in the second half of the year, compared with a loss in the first half of 2009. No profit figure was revealed, but the company’s full-year sales rose 10pc to 142bn yuan. In December, capacity utilisation at its aluminium operations exceeded 90pc, with production costs falling 17pc over the year.

As we have noted before, timing is everything in investment, and thus leads to arguments over which commodity has been the better performer out of copper and gold – and the other metals commodities too. On performance in 2009 there would seem to be no argument – copper rose some 140% and gold around 25% – but it was quickly forgotten how far copper and the other base metals plunged in 2008 before recovering. True gold fell too, but only by a fraction of the fall in other metals prices.

So, if one had bought copper at the end of June 2008 it would have cost just under $4.00 a pound – and the copper price now, after a 140% rise this year, would fetch a fraction over $3.30 – a fall of around 17.5% over the 18 months. Gold on the other hand was at around $930 an ounce at the end of June 2008 and is now at $1100 plus – a rise of over 18%. Thus which has been the better performer overall?

Over 2 years we see similar patterns. Gold is up 30% while copper is at almost exactly the same price it was at the beginning of 2008.

Thus arguably gold has proved to be a far better protector of wealth over a period of time than copper, and that is one of its key attributes and why gold investment still remains strong and why the current gold price is not a bubble. Investors continue to buy gold and gold derivatives like gold ETFs as protectors against financial meltdown. If there is a double dip ahead, as some predict, then there has to be the likelihood that base metals prices will plunge along with those of the stock markets in general. As in 2008, gold may also be vulnerable to falls as some metal has to be sold off to meet liquidity problems for major funds and institutions, but as was seen then, the fall is likely to be far less steep, and the recovery much faster, than for base metals, with gold holding its position much better as a wealth preserver than most other forms of investment.

The gold price is often talked of as being volatile, but as we saw last year nothing like as much as the other more industrially-related commodities, so it can smooth out dips in a way other metals, or even oil, generally cannot. What is true though, is that the kind of price crash we saw in October 2008 can create spectacular buying opportunities for those that fall the most as crashes, like steep price rises, are invariably overdone.

* Copper inventories rise to highest since April

(Recasts, adds comments/details, changes dateline from SHANGHAI)

By Michael Taylor

LONDON, Jan 4  – Copper rose almost 2 percent to a 16-month high on Monday, building on gains of about 140 percent last year, on strikes in top producer Chile and as more investors piled into the metal.

But analysts warned of volatile trading and price corrections in the coming weeks, as rising inventories prove that outside of China, fundamentals remain weak. By 1102 GMT, copper for three-month delivery on the London Metal Exchange traded at $7,504 a tonne from $7,375 at the close on Thursday. The metal, used in power and construction, earlier touched $7,509.75, its highest since Sept. 1, 2008.

“If you are trying to justify the moves over the last month, you will fail to find any real driver except exceptional demand in China,” said Commerzbank analyst Eugen Weinberg. “Everywhere else we are seeing increased in inventories.

“It is due to only one reason — demand from investors.” The latest LME data showed copper stocks rose 75 tonnes to total 502,400 — their highest level since April.

Aluminium inventories fell 4,475 tonnes but remain near record peaks above 4.6 million tonnes, while nickel stocks rose 414 tonnes to a new all-time high at 158,424 tonnes.

Commerzbank’s Weinberg added that the recent rise in the copper price due to supply concerns in Chile was overdone.

Union workers at Chile’s giant Chuquicamata copper complex, the world’s second biggest, began a strike over pay early on Monday, a union leader said.

Unprecedented Chinese buying, investor cash, a weaker dollar and improving economic data, helped the red metal to rally in every quarter last year.

The outlook for China’s economy, and thus for metals demand, remains robust after the manufacturing sector steamed ahead in December, with strong rises in new orders and output driving the official purchasing managers’ index (PMI) to a 20-month high.

The dollar dipped, coming off an earlier four-month high against the yen on Monday but remained broadly supported on growing optimism about the prospects for a U.S. recovery.

A weak U.S. currency makes metals priced in dollars less expensive for holders of other currencies.

“It’s more that people are selling the dollar to move into riskier assets, including metals,” said David Wilson, director of metals research at Societe Generale. “Index re-weightings are also happening over the next week or so.”

“Every indication is that indices will reduce percentage exposures to metals because they out-performed so dramatically last year,” he added. “But we’re still expecting indexes to take up more metal because of bigger flows of money coming in.”

On the macro calendar, U.S. December employment data due later this week will be watched for evidence of economic recovery and renewed demand.

Other metals tracked copper, with aluminium at $2,273.75 versus $2,230. The metal, used in transport and packaging, earlier touched a near-three week high at $2,278.

Steel-making ingredient nickel traded at $19,060 from $18,525, while battery material lead was at $2,494 from $2,432.

Zinc traded at $2,622.50 a tonne from $2,560, down from a high at $2,632.75, it’s highest level since March 2008.

Tin edged up to $17,355 from $16,950. Used in electrical solder, tin hit a 15-month high at $17,500.

* Top producer Codelco says can honor deliveries for now

* Short strike seen most likely scenario

* Workers at Altonorte smelter near deal to end strike

* Copper price hits new 16-month high

 CALAMA, Chile, Jan 4  – Workers at Chile’s Chuquicamata, the world’s second biggest copper complex, began a strike over pay early on Monday, a union leader said, hitting output from global No. 1 producer Codelco.

Strike votes at two large Chilean copper operations, Codelco’s Chuquicamata mine and Xstrata PLC’s Altonorte smelter, are seen lifting sentiment as the year grinds to a close and investors assess what next from markets that have rallied around 140 percent this year,

“The strength in copper is likely to continue at least through January, as sentiment is very optimistic and so far there doesn’t seem to be any major news that would alter the trend,” Guo Yong, an analyst at Jinrui Futures, said.

“Investors are paying very little attention to fundamentals these days — it’s mainly the investment demand that’s pushing copper prices up. Spot copper isn’t selling well, consumers still think the current prices are too high.”

London Metal Exchange copper jumped 2.8 percent to $7,265 by 0707 GMT from Thursday’s evening evaluation of $7,070, after a four-day hiatus. Copper earlier touched $7,273, its highest since early September 2008.

Benchmark third-month Shanghai copper rose 100 yuan to 58,360 yuan a tonne at the close, having scored a 16-month peak in the previous session. The more-active fourth month, April, rose 60 yuan to 58,590 yuan.

Worries about the 42 percent rise in LME stocks and the 485 percent surge in inventories in Shanghai this year could be soothed a little after workers at the two large Chilean operations voted to strike.

The vote at Chuquicamata threatens output of around 4 percent of the world’s copper concentrate, while the vote at Xstrata PLC’s Altonorte smelter could cut 1.5 percent of global output of copper anode.

“Those Chileans have dealt a double blow to copper bears. These strikes will lift copper sentiment, but industrial action in Chile rarely lasts, so unless they are really dug in it won’t change the fundamentals much,” a dealer in Singapore said,

Shanghai zinc dipped 30 yuan to 20,340, having scored a 20-month high in the previous session, while aluminium rose 1.1 percent to 16,980 yuan, and earlier hit a new 15-½ month peak of 17,030 yuan.

LME aluminium rose 1.1 percent to $2,280 from an evening evaluation of $2,255 on Christmas Eve, while zinc jumped 3.3 percent from Thursday’s assessed value, to $2,578, retreating $10 from an earlier peak when prices hit their highest since mid-March 2008.

Aluminium may see support after news that output from the world’s biggest bauxite miner, Guinea, fell by more than a fifth in the first nine months of 2009 due to “institutional instability”.

The Cape Lambert Resources vehicle said it has also resolved to reduce the minimum raising under the IPO to $164.5 million through the issue of 164.5 million shares at an issue price of $1 each.

With an original target of between $203 and $214 million, the size of the fundraising target was reduced after an unnamed UK investor pulled out of the deal because of the effects of the Dubai credit crisis.

The boards of Q Copper and Cape Lambert, together with IPO lead manager Patersons Securities Limited, have consequently agreed to a variation of the pricing and closing date.

“Whilst we are disappointed with the need to reprice and extend the closing date of the Q Copper IPO, it will not affect our proposed partially franked, special dividend of 10 cents per share,” Cape Lambert executive chairman Tony Sage said.

“It still represents an excellent return over the acquisition cost of the asset in a relatively short period of time.”

It was believed that Cape Lambert had been targeting up to $158 million from the Q Copper float in return for reducing its shareholding to 10%, but the revised deal will see Cape Lambert receive a total consideration of approximately $137.5 million in cash and Q Copper.

News of the revised IPO comes just days after Talison Lithium withdrew from its planned listing due to its failure to reach an “acceptable value.”

A Talison spokesperson told MINING DAILY that the company, which had planned to raise between $143.5 million and $196.4 million, is unsure whether it will be pursuing another IPO in the near future.

Copper for three month delivery closed on December 24 last year at $US2845/tonne. Last night a similar contract was trading at $US6895/tonne. And, of course, it has been higher than that: on December 2, copper was being traded at $US7125/tonne.

The impact of this more than doubling of the copper price was shown this week when the Chilean copper export figures for November came out: they were 81 per cent up on the same month in 2008.

There was some significant local copper news out today.

A deal involving GBM Resources (GBZ) shows not only the level of interest in copper but also the increasing pace of engagement coming out of Japan, where there is considerable fear of the speed with which China is locking up mineral resources all around the globe.

Start of sidebar. Skip to end of sidebar.
Related Coverage
OZ Minerals, IMX to form SA joint venture Adelaide Now, 29 Nov 2009
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BHP boosts Olympic Dam reserves The Australian, 15 Sep 2009
China syndrome again The Australian, 13 Sep 2009
Explorers are go The Australian, 10 Sep 2009
End of sidebar. Return to start of sidebar.

The agreement means that Pan Pacific Copper Co, the world’s largest buyer of copper concentrate, can spend up to $55 million on the development on new GBM projects in Queensland. Once the joint venture documents are inked, Pan Pacific will earn a 51 per cent interest in 16 GBM exploration permits. Pan Pacific can move to 90 per cent by outlaying an additional $40m.

(Last month GBM Resources secured $2.6m in financing by joint venturing its phosphate projects in the Mt Isa region with Singapore-based Resource Kings.)

Quiet toiler Mithril Resources (MTH) has produced some encouraging drill results from what it calls a new, largely untested greenfield copper discovery on its ground east of Alice Springs. Results from four holes were released today; one of those drilled through 146m of mineralisation with an average grade of 0.24 per cent, but with 11.15m of that intersection returning 0.51 per cent.

There were also meaningful cobalt grades. This prospect, called Basil, is a 10km-long trend that has had little work so far.

And Sabre Resources (SBR) seems to be excited by its Kaskara project in Namibia. Sampling has produced assays of up to 16 per cent copper, 14 per cent zinc and 35 per cent lead.

Production from the mine – the world’s fourth largest copper deposit – may drop by up to 70 000 t before repairs to the main shaft are completed and full production resumes, the Australian Bureau of Agricultural and Resource Economics (ABARE) said.

Its estimate of losses from the mine is up to 40 percent higher that most analysts’ forecasts, and represents more than a third of total capacity of around 200 000 t/y.

Copper prices are already rising – up by around $1 000/t to $6 900/t since the start of October, and more than doubling so far this year – on concerns that global demand could outpace supply next year.

In its latest quarterly outlook, ABARE cut its forecast for refined copper exports by 15,8 percent for the year to June 30, 2010, and its estimate for refined copper output by 13 percent to 408 000 t.

“If realised, this will be the lowest refined copper production recorded in Australia since 1998-99,” it said.

Australia’s Macquarie Bank predicts a global copper supply deficit is looming this year that will take two years to correct, increasing its 2010/2011 copper price forecasts by two to three percent on Tuesday to $3,25/lb to $3,40/lb ($7 166/t to $7 500/t).

The bureau also revised up iron ore exports by two percent and coking coal exports by 16,2 percent, citing strong demand for raw materials by Asian steelmakers.

Chinese imports of coking and thermal coal and iron ore should remain strong into 2010, underpinning higher production from Australia mines as demand shows signs of picking up in other Australian export markets, according to the bureau.

The iron ore export trade is a high stakes business worth more than $80-billion a year.

It is dominated by Australians Rio Tinto and BHP, along with Brazil’s Vale, on the mining side, and China, the world’s biggest iron ore consumer, on the other.

“China will continue to have a significant influence over the demand for minerals and energy commodities in 2010, but consumption is also forecast to increase gradually in OECD economies,” the bureau said.

Organisation for Economic Co-operation and Development (OECD)-based consumers that drew on their own inventories as the global economic slowdown worsened, reinforcing the sharp weakening of underlying demand for industrial commodities, may soon be returning to the market to replenish stockpiles, according to the bureau.

“The rebuilding of stocks in 2010, if it occurs, will provide additional support for minerals and energy commodity demand,” it said.

In October, haulage equipment failed inside the main shaft of Olympic Dam, which transports 75 percent of the mine’s copper and uranium-bearing ore to the surface. It is under repair and is not expected to be fully operational until the first quarter of 2010, according to BHP Billiton.

“I’m not sure the high copper price is a good thing,” Caleb Fundanga said at a Zambia investment forum in London.

Three-month copper on the London Metal Exchange was trading at $7,110 a tonne on Thursday.

“We are questioning if $7,000 is a sustainable price for copper but $5,000 is a good price,” Fundanga added.

Copper mining is Zambia’s economic mainstay and copper and cobalt producers are a major employer in the southern African country.

Copper prices fell steep in the final months of 2008 with the December spot price on the London Metal Exchange (LME) at $1.39, as compared with the 2008 peak of $3.94 which was hit in April. But in the first three months of 2009, the LME spot copper price has averaged $1.55.

Bloomberg News reports that LME metals jumped in price in March as some investors bought commodities in anticipation of a rebound in global economic growth. The exchange’s index of copper and five other industrial metals increased 11% in March, the most in 13 months. However, the International Copper Study Group recently announced that copper supply ended 2008 ahead of demand. Refined copper production rose by 3.4% on the year in 2008 to just over 14.7 million metric tons, the ICSG said in its latest report. Copper usage was up 1.9% in the same period to 13.9 million metric tons.

The head of research Nicholas Brook at London-based ETF Securities, who says that prices of copper “have probably found a floor” since several mining companies have cut activity in the past year due to lower prices and reduced access to financing. In a conference call reported by Reuters, Brooks predicts that copper prices in the short term will be underpinned by China, which has announced aggressive infrastructure spending.

However, the buying surge in China may not be here yet, as China’s economy grew by 6.1% in the first quarter, its slowest pace in 10 years. Premier Wen Jiabao says that while China’s economy is in better shape than other nations, “it is still some ways off from a full recovery.”

The commodities team at New York-based J.P. Morgan Securities has written to clients that “the undeniable reality for the copper market is that outside of China, demand remains moribund.” These analysts believe that a lasting recovery in copper’s price still is a long way off but are reluctant to pronounce a bottom because “even with projections of a modest improvement in western world demand in the second half, when stimulus efforts start to take effect, we believe that China’s growth will not be enough to offset the demand destruction seen in the western world.”

Still, the J.P. Morgan analysts do see copper averaging a slightly higher $1.67 in 2010, noting that strong gains are not likely for some time due to high inventories and fairly weak overall demand.

The shutdown of Escondida, which accounts for 8 per cent of the world’s copper output, pushed up the price of the red metal by $180 per tonne to $7,470 on the London Metal Exchange. Chile’s President, Michelle Bachelet, called for talks to resume between the miner and the unions, who are demanding a substantial pay rise and bonuses to reflect the huge profits earned from high copper prices.

In London, the price of nickel gained $300 per tonne as volumes in LME warehouses dwindled further. China’s largest nickel producer expressed concern that the nickel market was being distorted by speculators and urged the LME to improve regulation.

“The LME is no longer a place for fair dealing metals but a paradise of speculation,” said Li Yongjun, chairman of Jinchuan Group, the largest nickel producer in China.

Nickel reached a record high of $29,200 per tonne in the forward market as stocks plummeted to less than a day’s supply. The premium for cash nickel over three-month delivery widened to almost $5,000 per tonne, prompting the LME to introduce emergency rules on Wednesday to allow short sellers to escape the squeeze.

BHP’s tough stance with the Escondida strikers may be supported by the Chilean Government, reckoned some analysts, as Escondida pays its workforce the highest mining wages in Chile, and the state copper company, Codelco, will be anxious to avoid a high settlement with its own workers. “They won’t want to see BHP set a precedent and stoke higher wage claims at Codelco,” said Robin Bhar, metals strategist at UBS.

BHP said that it had shut the mine for safety reasons but Pedro Marin, a spokesman for the strikers, accused BHP of trying to scare the workforce. “This is illegal pressure,” he said.