BBL BHP Group Plc

By Katherine Dunn 

LONDON--Copper prices edged higher on Thursday as workers at the world's largest copper mine prepared to go on strike.

The three-month London Metal Exchange copper price was up 0.05% at $5,870.50 per metric ton, after moving between gains and losses throughout the morning.

On Thursday, workers at the Escondida copper mine in the Atacama Desert of northern Chile will begin striking, after government-mediated talks between the union and management broke down. The mine, which supplies roughly 5% of the world's copper supply, is majority owned by BHP Billiton Ltd.

In a statement on Wednesday evening, BHP said that the mine would cease all production at the mine during the strike as a safety precaution, but said it had asked for permission to keep a group of workers on site for maintenance activities.

After lengthy negotiations, the strike was already priced in, said Warren Patterson, a commodities strategist at ING in Amsterdam.

"Pretty much everyone in the market was expecting it," Mr. Patterson said.

Copper prices are sitting on a large rally that has pushed prices up by more than 6% since the year began, spurred by concerns about supply disruptions as well as bullish sentiment about demand from China and hopes that the Trump administration will invest in infrastructure.

"I think [the strike is] underpinning prices," said William Adams, head of research at FastMarkets in London. The metal has failed to break the $6000 per ton mark, he noted. "I don't think it's providing fresh fuel."

The metal is also facing headwinds from a strong greenback, which is typically bearish for dollar-denominated commodities. On Thursday, the WSJ Dollar Index, which weighs the dollar against a basket of other commodities, was up 0.03%.

Traders are now focusing on how long the strike will last, according to analysts, and the threat of disruptions at other mines.

If Freeport-McMoRan Inc.'s Grasberg copper mine doesn't receive an export license from the Indonesian government by midmonth, the company has said it would make cuts to operations there. The two mines account for up to 10% of global supply combined.

The other base metals were mixed on Thursday. Nickel was down 0.14% at $10,460 a ton, aluminum was up 0.32% at $1,854 a ton, lead was up 0.08% at $2,392 a ton, zinc was up 0.92% at $2,862 a ton, nickel was down 0.14% at $10,460 a ton, and tin was down 0.47% at $18,910 a ton.

Write to Katherine Dunn at Katherine.Dunn@wsj.com

(END) Dow Jones Newswires

February 09, 2017 06:53 ET (11:53 GMT)

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