NEW YORK Kennecott Utah
Copper has declared force majeure after a wall slide
forced the company to suspend mining at its Bingham Canyon
The division of Rio Tinto Plc
expects April shipments of copper cathode to continue as
planned, but May shipments from inventory at its refinery will
be at a reduced level. "Thereafter, we do not anticipate the
ability to make further shipments for the foreseeable future,"
the company said in an April 15 letter to customers.
"We will continue our force
majeure status until we are able to perform our
obligations," the company added.
Kennecott, which continues to
produce copper cathode at its refinery using stockpiled
amm.com, April 12), said it will provide
information on May shipments and other shipments as soon as
Separately, London-based Rio
Tinto has cut its 2013 copper production forecast in the wake
of the April 10 wall slide. Rio Tinto now expects to produce
about 540,000 tonnes of mined copper this year, down from
Februarys forecast of 665,000 tonnes, and 205,000 tonnes
of refined copper, down from the 305,000 tonnes it forecast in
amm.com, April 16).
The Bingham Canyon woes will
undoubtedly cause a spike in copper premiums, traders and
consumers agreed (
amm.com, April 15). Higher numbers are already
being quoted, although few transactions have taken place
I think premiums will skyrocket, one trader told
AMMs spot copper cathode premiums are between
4.5 and 5.5 cents per pound, but market participants speculate
they will move up by at least a couple of cents.
Consumers and traders could meet their copper needs with
imports, most of which enter the United States via New Orleans.
That isnt a solution for everyone, however, as freight
costs from New Orleans to the Midwest are very expensive, the
This is taking 15,000 tonnes a month out of domestic
circulation, the trader said. Forget the
warehouses; youll never get any out of there. And the
stuff coming through New Orleans is expensive. This is not a
The Kennecott outage is not a huge deal in the (global)
market, but its a big deal in the United States,
the trader added.
The outage hasnt yet affected copper prices, with
three-month copper on the London Metal Exchange closing the
official session April 16 at $7,250.50 per tonne, down 3.5
percent from $7,516 a week earlier and 12.5 percent below this
years high of $8,286 per tonne in early February.
Weak copper demand from Europe and China has kept LME prices
low, sources said.
We havent seen an impact yet in terms of prices. It
shows you how market fundamentals arent good, a
second trader said.
"For a little while, the price doesnt always reflect
the local conditions," the first trader added.