Grasberg outage lifts copper to 2-week high

Over the weekend Indonesia’s mines minister  ordered Freeport McMoRan Copper and Gold (NYSE: FCX) not to restart production at its Grasberg copper-gold mine until the result of a probe into recent accidents at the mine is complete.

That independent investigation could take at least two months an official from the Phoenix, Arizona-based company said.

The potential for an extended shutdown at Grasberg – the world’s largest gold mine and third largest copper mine –  in the West Papua province buoyed the copper price this week.

Copper gained  just under 1% to change hands for $3.37 a pound on Tuesday, building on Monday’s jump and up from $3.27 on Friday. Copper is up more than 10% since May 1.

Standard Bank says in its daily research note that the shutdown “could remove anything from 100-150kt of copper supply from the market, taking a chunk out of analyst’s disruption allowances (generally between 600-800kt).”

The most immediate impact will be felt on the concentrates market, however, particularly with the Tuticorin smelter restarting and no longer pushing unwanted concentrate into the spot market.