MercoPress. South Atlantic News Agency

Copper prices expected to climb given uncertainty of Chilean supply

Chile is the world’s leading producer of copper

Copper is likely to climb when trading starts on Monday, lifted by uncertainty over supply after the world's top copper producer Chile suffered a massive earthquake, analysts said over the weekend.

The 8.8-magnitude quake, one of the world's most powerful in a century, killed more than 700 people as it toppled buildings, knocked down the country's infrastructure and triggered tsunami wave alerts along Pacific coastlines as far as Japan, Hawaii and Russian Far East.

The actual impact on the copper production was seen limited as major mines were mostly located up north and after mining companies said they were resuming operations after work was initially suspended.

Nevertheless, analysts still expect prices to rise, because of possible damage to infrastructure, as well as disruption in power and transportation to the mines, which could potentially slowdown the operations.

“I expect that the copper market will react to the news even though it is likely to have little material impact on production,” analyst Daniel Brebner at Deutsche Bank said on Sunday.

“Some infrastructure may be damaged... possibly some port damage if the tsunami damages parts of the coast. So there may be some safety work required given the magnitude of the quake despite the distant nature of the event,” he said.

The quake had forced an initial suspension of up to a fifth of Chile's copper mining capacity -- estimated at around 4.5 million tonnes in concentrate annually -- as Anglo American and state-owned Codelco halted output at four mines.

Codelco said it had restarted operations at its El Teniente mine and that the Andina mine should also restart, although sufficient power had not yet been restored late on Sunday.

A company official said the pace of output recovery at El Teniente would depend on power supply. The mines produced 614,000 tonnes last year.