UPDATE 3-World No. 3 copper mine halts shipments, prices up

* Collahuasi declares force majeure on concentrate sales

* Disruption at world No. 3 mine lifs copper for now

* Repairs could last at least a month – port official
(Adds analyst comments)

By Antonio de la Jara and Alonso Soto

SANTIAGO, Dec 20 (BestGrowthStock) – The world’s No. 3 copper mine,
Chile’s Collahuasi, said on Monday it halted shipments of
copper concentrate after a weekend accident shut its key sea
port terminal, fueling global supply worries.

The surprise force majeure announcement– a clause that
frees the company from contractual deliveries due to actions
beyond its control — could further lift copper prices already
trading at near all-time highs on tight supply.

“I have to inform that as of today, Collahuasi has declared
force majeure over its copper concentrate sales contracts until
further notice,” Collahuasi’s operator said in a statement,
adding it was evaluating the time required for repairs.

Copper for three month delivery (CMCU3: ) on the London Metal
Exchange rose nearly half a percent shortly after the news to
trade above $9,200 a tonne. Collahuasi had previously said it
was seeking for alternatives to export its copper.

The terminal at Patache, which exports mostly copper
concentrate, could be shut for at least a month for inspection
and repairs, said port Captain Domingo Hormazabal.

“The company has to make sure the port structure is safe,”
Hormazabal said. “We will have more information on operations
once the inspection is done.”

A former Collahuasi executive told Reuters the terminal may
remain shut for at least three weeks during a police probe into
the accident that killed three workers.

The terminal is key for the mine, which last year produced
about 3.3 percent of the world’s mined copper, or more than
535,000 tonnes — of which nearly 88 percent is concentrate.

Collahuasi, jointly owned by Anglo American (AAL.L: ) and
Xstrata (XTA.L: ), was able to ship copper during a month-long
workers strike by stockpiling material at the port and mine
site. The operator had planned to ship about 52,000 wet tonnes
of copper concentrate by mid-December.

HOLIDAY REPRIEVE?

“They didn’t declare force majeure during the strike
because they had inventory so this may be a bit more serious
now,” said Robin Bhar, an analyst with Credit Agricole. “But in
the holiday season demand is subdued so they may be able to go
ahead without big problems.”

He added that the operator’s move to exercise force majeure
could be a prudent measure to warncostumers of future delays.

Force majeure plus the month-long strike could hit
Collahuasi’s annual output target as the giant mine works on an
expansion to nearly double annual production and become the
world’s top copper deposit.

Collahuasi is likely to seek to deliver copper from other
ports in northern Chile such as the Antofagasta port, although
availability could be an issue, traders said.

A new shipment departed from Patache just before the
accident, the operator said.

Collahuasi produced 43,126 tonnes of copper cathodes and
492,727 tonnes of concentrate in 2009 — most of which was sold
to China, India and Japan, according to the company’s annual
report.
(Additional reporting by Melanie Burton in London; Editing by
David Gregorio)

UPDATE 3-World No. 3 copper mine halts shipments, prices up