Zambia power cuts feed copper supply worries, lift prices
Copper prices were on their way up Tuesday, after touching a six-year low the day before, as Zambian power utility Zesco Ltd announced power supply cuts that will affect all customers, including mining companies.
Futures for September delivery jump 2% in New York to $2.4015 a pound at 10:51AM, heading for the biggest gain in two weeks, after they touched $2.3375 on Monday, the lowest since 2009.
On the London Metal Exchange, copper for three-month delivery climbed 2.2% to $5,302 a ton (or $2.41 a pound).
The industrial metal has lost almost 20% of its value from a May 5 peak, just steps away of meeting the common definition of a bear market.
Canada’s First Quantum Minerals (TSX:FM), Zambia's largest foreign investor, warned Monday that the power restrictions could hit output at its Kansanshi mine. While Toronto-based analyst at TD Securities Inc., Greg Barnes, said the measure also threatens the miner’s progress at its Cobre Panama project in Latin America because of a potential liquidity squeeze, Bloomberg reports.
Other foreign firms that will be affected by the cuts include Barrick Gold (TXS, NYSE:ABX), Glencore (LON:GLEN), Impala Platinum (JSE:IMP) and Vedanta Resources (LON:VED).