As of February 13, copper prices on the London Metal Exchange rose by roughly one percent to 6,110 USD per ton, the metal’s highest price in 20 months.
The surge was caused by supply decreases due to the world’s two largest mines halting production. BHP Billiton declared a force majeure on shipments from its Escondida mine in Chile on February 10, hiking copper prices 4.2 percent to 6,095 USD per ton, the highest rate since June 2015. A force majeure is a contractual clause used when suppliers can’t meet obligations because of circumstances beyond their control. Exports at the world’s second-largest copper mine, Freeport-McMoRan’s Grasberg mine in Indonesia, have been suspended for a month.
Rio Tinto, which partners in a joint venture with Freeport, previously said it was considering exiting the mine after Freeport warned it could be forced to cut production and reduce its workforce if permit issues weren’t resolved by mid-February. Freeport has now been issued a new export permit from the Indonesian government.
The news from London has been positive for Mongolia, and analysts say the Oyu Tolgoi and Erdenet mines could benefit from the surge.