Strike at World's Largest Copper Mine?

The market is paying close attention to the labour situation at BHP's Escondida copper mine, which is the worlds largest copper mine. If the they cannot negotiate a deal, then there will be a strike and global copper supply could get a lot tighter. In 2017, workers at the mine engaged in a 44-day strike. ​

However, the union representing workers at BHP’s Escondida mine voted to reject the company’s latest contract offer. The two sides have entered a mediation period, after which the union can initiate a strike if an agreement cannot be reached.

Looking at copper production through the year so far, the International Copper Study Group (ICSG) has estimated that the global copper market had a surplus of 70,000 metric tons through the first four months of the year.  The ICSG estimated global copper production rose by 4% through the first four months of 2021 compared with the same period in 2020 and concentrate production rose by 6%. In Chile, the world’s top copper producer, copper mine production fell by 2% and its concentrate production rose by 3%.

Elsewhere, Peru, the second largest producer, saw its copper mine production rise by 10% year over year during the four-month period. However, Peru’s production during the period fell by 27% compared with the first four months of 2019. The ICSG noted that Indonesia’s copper output rose by 80% due to a ramp-up at the Grasberg mine.

Looking at global refined copper, production rose by 4% during the first four months of the year, however, Chile’s refined copper output dropped by 8%. Global refined copper production from scrap rose by 3% during the period.

From a price perspective, the market has been trading sideways for a month but the LME three-month copper price has made gains over the last two weeks. Traders are now focused on the outcome of the labour situation at BHP's Escondida mine.