By Michael Amon and Ira Iosebashvili 

Copper prices edged to a fresh 20-month high on Monday, as a strike at the world's largest copper mine and the threat of supply disruptions at an Indonesia mine stoked supply worries.

Copper for March delivery closed up 0.5% at $2.7830 a pound on the Comex division of the New York Mercantile Exchange. Prices hit $2.8230 a pound earlier in the session, their highest level since May 2015.

Prices for the industrial metal, which is heavily used in manufacturing and construction, are up more than 11% this year on supply shortages and expectations of stronger economic growth in China and the U.S. The rally has also boosted the prospects of several large copper miners.

Last week, talks between management and workers at Chile's Escondida mine broke down. Workers at the mine, the world's largest, have been striking since Thursday. On Friday, BHP Billiton Ltd., the majority-owner of the mine, said it would not be able to fulfill contracts for copper deliveries or shipments as a result of the strike, according to a spokesman.

Traders are also closely watching for news at Freeport-McMoRan Inc.'s Grasberg mine in Indonesia. The company has said that it will make cuts to output if it doesn't receive an export license from the government by midmonth.

Together, the two mines account for some 8% of the world's copper output, analysts at Barclays estimate.

The twin outages "are a dream scenario for copper bulls," the bank said in a note to clients.

Meanwhile, big miners like Glencore PLC, Rio Tinto PLC and Freeport McMoRan Inc. have tried to boost their copper portfolios in the past year in anticipation of a price revival, and are now poised to reap the rewards.

Shares in Glencore PLC, one of the world's biggest producers and traders of copper, have jumped by more than 30% since late October, when prices began their march upward.

The Switzerland-based miner could capitalize further later this year, when it is scheduled to reopen a large copper mine in the Democratic Republic of Congo. The company closed the mine, called Katanga, in September 2015 for a $1 billion renovation plan -- part of a turnaround strategy engineered when prices were low and the company's share price in a nose dive.

Glencore on Monday upped its copper bet with a $534 million deal to buy out a large partner's stakes in Katanga and another big Congolese copper mine.

Glencore Chief Executive Ivan Glasenberg -- among the industry's biggest copper bulls -- suggested last August that copper was underpriced and that much of the industry was wrong about "a big wall of supply" coming that would sink prices. Two months later, copper prices began their current climb.

Rio Tinto this month raised its dividend and unveiled a $500 million plan to buy its own shares, in part because of the recovery in the copper price.

The company is advancing with a major mine in Mongolia that will be one of the world's biggest when it starts producing in 2020. Rio Tinto has bulked up its copper profile to help diversify away from iron ore and coal, and its CEO Jean-Sebastian Jacques was installed last year after running the company's copper division.

Freeport-McMoRan Inc., the Phoenix-based miner, is in the midst of refocusing its business on copper, selling off billions of dollars in oil-and-gas assets in recent months. The change in strategy was announced before copper prices began soaring, and the company's share price is up over 50% in the past four months.

Katherine Dunn contributed to this article.

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

 

(END) Dow Jones Newswires

February 13, 2017 16:01 ET (21:01 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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