Miners stop work in Chile as heavy rains flood roads

By Fabian Cambero

SANTIAGO (Reuters) – Heavy rains in northern Chile, the world’s largest copper producer, have forced companies to suspend operations at several of the region’s main mines, reducing capacity of the red metal to an estimated 1.6 million tonnes.

The country, which produces a third of the world’s copper, is likely experiencing the biggest production decline since the April 2014 earthquake.

The unusually heavy rainfall in the desert region caused landslides and rivers to overflow their banks, stranding residents, flooding cities and disrupting electricity supplies.

The world’s largest copper producer Codelco has suspended mining operations at its Chuquicamata, Ministro Hales, Radomiro Tomic, Gabriela Mistral and Salvador deposits due to the condition of roads and mine access as a result of the rains, the state-owned company said on Wednesday.

These mines accounted for around 59 percent of the 1.67 million tonnes of copper produced by Codelco in 2014.

Codelco said mineral reserves were being used in the Gabriela Mistral, Radomiro Tomic and Salvador plants. The company could not say whether this also applied to the other two mines.

News of the closures supported copper prices. On the London Metal Exchange, copper prices rose 0.3 percent to $6,145 (£4,127) at 2:19 a.m.

LIMITED LONG-TERM IMPACTS

While the bad weather may cause headaches for producers, market participants said it will have little impact on production in Chile in the long term.

“This is a logistical bottleneck and not a major catastrophic event like a landslide or an earthquake,” said Edward Meir of brokerage firm INTL FCStone in New York.

Mining Minister Aurora Williams said there had been no significant damage to large and medium-sized mines and the suspensions were preventative in nature.

Other mines affected by the rains or snow include the Michilla mine and Centinela copper complex in Antofagasta, Anglo American PLC’s Mantoverde, Lundin Mining Corp’s Candelaria, KGHM-controlled Sierra Gorda and JX Nippon Mining & Metals’ Caserones.

BHP Billiton did not confirm whether its operations at Escondida, the world’s largest copper mine, were affected.

“We continue to monitor the situation to ensure the safety of our employees and assess the impact on our sites,” a BHP Billiton spokeswoman said.

The rains have caused telephone service outages, making communication difficult in the region.

(Additional reporting by Josephine Mason in New York and Yuka Obayashi in Tokyo; Writing by Anthony Esposito, Rosalba O’Brien and Melanie Burton; Editing by Chizu Nomiyama, Alan Crosby, G Crosse and Phil Berlowitz)