--Comex July copper up 0.9% at $3.2220/lb
--Freeport McMoRan declares force majeure on copper shipments
from Indonesia
--Copper traders look ahead to new supply from Rio's Oyu Tolgoi
mine
By Tatyana Shumsky
NEW YORK--Copper futures rose Wednesday after Freeport McMoRan
Copper & Gold Inc. (FCX) declared force majeure at Indonesia's
Grasberg mine, underscoring the potential for tighter supplies this
year.
Still, gains were muted as traders anticipate new copper supply
to come on line as the massive Oyu Tolgoi mine in Mongolia ramps up
output to commercial levels.
The most actively traded contract, for July delivery, was
recently up 2.70 cents, or 0.9%, at $3.2220 a pound on the Comex
division of the New York Mercantile Exchange.
The world's largest listed copper mining company, Freeport
McMoRan, said operations at its Grasberg mine in Indonesia remain
shut amid an investigation into the cause of a May 14 roof collapse
that killed 28 workers. The company notified its clients that sales
from the mine would be disrupted and invoked force majeure, a
contract clause indemnifying it from liability due to events
outside of its control.
"Grasberg is a big deal," said Bill O'Neill, a principal with
Logic Advisors.
Freeport McMoRan said it was losing about 3 million pounds of
copper a day as a result of the suspension. Grasberg is one of the
world's largest open-pit copper mines, and was expected to produce
between 1.1 billion and 1.2 billion pounds of copper in 2013,
according to company documents.
Copper prices also drew strength from data showing euro-zone
industrial production rose for the third straight month in April.
Industrial production in the 17 countries that share the euro rose
0.4% from March, but was down 0.6% from April 2012.
"We're seeing some improvement in Europe, but it's still coming
from a weak base," Mr. O'Neill said.
But copper's gains were muted as traders are also anticipating
that new copper supply will soon reach the market from Rio Tinto
PLC's (RIO) Oyu Tolgoi copper mine in Mongolia. The mine is
expected to reach commercial production this month, and over its
life, produce an average of 425,000 metric tons of copper and
460,000 ounces of gold a year.
"The exploitation of the world's largest-known copper-gold
deposit will contribute significantly to expanding supply on the
global market," Commerzbank analysts said Wednesday.
-Write to Tatyana Shumsky at tatyana.shumsky@dowjones.com