Chile mines reopen after quake

2 Mar 2010, 10:04 am   -   Source: Reuters
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SANTIAGO (Reuters) - Chile's mines returned to service on Monday after the massive weekend earthquake briefly shut nearly a quarter of the top copper producer's output, while improving power supply eased concerns of further disruption.

SANTIAGO (Reuters) - Chile's mines returned to service on Monday after the massive weekend earthquake briefly shut nearly a quarter of the top copper producer's output, while improving power supply eased concerns of further disruption.

As miners confirmed that operations were resuming, London copper prices tempered gains to end up nearly 3 percent after a knee-jerk jump of more than 5 percent when markets opened after Saturday's 8.8 magnitude quake, among the largest on record.

Despite heavy damage to Chile's infrastructure near the epicenter some 200 miles south of Santiago, there was no serious damage reported to the copper mines around the capital that were shut by power outages, while the biggest deposits some 600 miles to the north were unaffected.

And while the southern electricity grid that serves mines near Santiago suffered from the quake, state-owned Codelco, the world's No. 1 copper producer, said Monday afternoon that all its mines were receiving normal electricity.

Codelco restarted its Andina mine, the last major facility to confirm that it was up and running on Monday. Its massive El Teniente underground mine, which accounts for more than 7 percent of Chile's copper, reopened on Sunday.

"Chile's earthquake is unlikely to have a lasting impact on production and trade, beyond a short-term price rally given that all mines are intact. Infrastructure will likely be quickly restored, (and) global inventory levels are at relative highs," analysts at UBS said in a report.

The biggest question by Monday focused on the availability of electricity, a factor that a host of operators cited as hindering the recovery to full production rates in a country that produces about one-third of the world's copper.

"At Candelaria, reliable power is the issue there. It went out on Saturday and as of reports today that is being restored," Freeport McMoRan Chief Executive Richard Adkerson told an investor conference hosted by BMO Capital Markets. Freeport's Candelaria mine had been temporarily offline.

Antofagasta PLC's Los Pelambres mine was coming back on line after losing power. Anglo American PLC said it had restarted operations at the Los Bronces, El Soldado and Mantoverde mines that account for about half of the company's copper production, as well as its Chagres smelter.

Brookfield Infrastructure Partners , whose Transelec is Chile's largest electricity provider, said early assessments showed transmission towers of its company were largely unaffected. It said it was able to meet demand in the worst-hit area around the central city of Concepcion.

A Transelec official said it had addressed all major problems, and that remaining issues -- which could take "months" to resolve -- were on a smaller scale affecting only final distributors, not generation or transmission systems.

Both of the country's oil refineries, including the Bio Bio plant just outside of the hard-hit city of Concepcion, were shut, forcing Chile to step up diesel imports, which could be further increased by demand for generators.

ENAP may be able to restart the 100,000 barrel-per-day (bpd) Aconcagua refinery near the capital in five or six days, a union leader said, while state oil firm ENAP said it would buy a 65,000-cubic meter diesel shipment.

After surging as much as 5.6 percent to a five-week high of $7,600 when trading opened Monday on the London Metal Exchange, the benchmark three-month copper contract ended up just 2.8 percent at $7,400 a tonne, while May COMEX copper rose 2 percent.

PORTS RETURN, STEEL UNIT OUT

Chilean ports were also restarting operations.

Denis Yanez, the head of a national confederation of port workers, said the copper exporting port of San Antonio was scheduled to restart operations at 10 a.m. EST (1500 GMT).

He said the major port of Valparaiso started receiving shipments on Sunday and was expected to increase its load later on Monday.

Chilean fertilizer, lithium and iodine producer Soquimich said it sustained no damage to local facilities following the earthquake.

Iron ore producer CAP said Monday it was forced to close its southern Huachipato steel unit and that repairing the damage will take at least three months to get output back to normal.

Industrial conglomerate Copec , one of the world's biggest producers of cellulose, said it halted forestry operations in the areas hit by an earthquake this weekend.

(Writing by Alden Bentley; reporting by Alonso Soto in Santiago, Carole Vaporean in New York, Rebekah Curtis in London; Editing by Lisa Shumaker)

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