Global copper prices rose on Thursday after news that one of the world’s major copper mines could close indefinitely.
Comex copper prices in New York jumped 2.4% to more than $US4.28 a pound on the news, halting the recent slide in the price of the metal.
Talk of a state of emergency declaration to keep the mine opened emerged after the owner, MMG of China announced the closure deadline for this weekend.
Peru’s prime minister Mirtha Vasquez sounded less than enthusiastic about declaring a state of emergency which she said would be a “last resort” to defuse the road blockade that led MMG to suspend operations at its Las Bambas copper mine for the first time.
Some sort of official intervention though can’t be ruled out because the Peruvian is under growing Chinese pressure to correct the situation.
China-controlled but Australian based miner, MMG said it will shut production at its huge Las Bambas copper mine in Peru from Sunday after talks failed to reach an agreement with the Peruvian community blocking a transport road used by the operation.
The blockade by residents of Chumbivilcas province in the southern Peruvian Andes has been in place since November 20.
The shutdown is expected to halt production at the Chinese-owned mine, which accounts for 2% of world copper supply. Peru is the world’s second major copper producer after Chile.
The news saw the Hong Kong-listed shares of MMG plunge nearly 12%, before they recouped some losses to trade 5% lower.
The point of contention is a dirt road used by Las Bambas to transport copper to a seaport. Residents from several regions who live along the road claim the dust raised by the trucks pollutes their crops and affects their livelihoods. They have been asking the mine for jobs and economic contributions.
“These dialogues sometimes can include delays, because reaching a consensus is not easy,” Prime Minister Mirtha Vasquez told reporters on Wednesday about the conflict. “But we cannot sustain this situation for much longer.”
The government failed earlier this week to carry out a meeting between the parties as talks stalled, with a Chumbivilcas leader saying the company’s latest proposal on jobs and contributions was a “joke.”
MMG said stockpiles on the site are about 60,770 tonnes of copper concentrate as the blockade stopped transportation to the seaport, and inbound movement of “critical consumables”.
“The company continues to request the immediate removal of the illegal roadblocks to facilitate transparent, open and constructive dialogue,” MMG said in a statement.
Las Bambas is a joint venture open cut mine between the operator MMG (62.5%), a wholly owned subsidiary of Guoxin International Investment Co. Ltd (22.5%) and CITIC Metal Co. Ltd (15.0%).
With an estimated mine life of 18 plus years, the operation produces copper concentrate, with by-products of gold and silver, as well as molybdenum concentrate.
It has a yearly capacity to mine and process around 51 million tonnes of ore to produce between 300,000 and 330,000 tonnes of metal in concentrate. In 2020 Las Bambas produced 311,020 tonnes of copper concentrate and 3,167 tonnes of molybdenum but this year has been a different story with the rising tide of local discontent.