1.0 million tonnes of high grade uranium..., page-4

Escondida forced to cut supply is also great news for Copper - it produces ~8% of global supply

"Chile's Escondida, the world's biggest copper mine, said late on Friday it would be unable to meet its contract obligations for some copper concentrates after it was forced to shut down a mill used to pulverize rock."



Below is from report from Macquarie:

Event!
According to reports, Escondida has declared force majeure on sales contracts due to technical issues in the Laguna Seca SAG mill.

Impact!
A driver of the world's copper supply. Escondida produced a combined 1.4mt of cu-in-concentrate and copper cathode in FY08 (100% basis) and as the largest producer of copper in the world, generated US$4.96bn of EBIT for BHP Billiton (or 20% of the group total). To contextualise the importance of the asset to consumers, total CY07 Escondida copper production represented ~8% of global supply.

Another 140kt of copper production to be lost at Escondida!
We understand that the likely impact of lower throughput will be the loss of an additional 15% of cu-in-concentrate production for FY09. Notably, that impact is over and above the 10–15% volume decline (all forms of copper) previously flagged for Escondida this financial year. On that basis, we have lowered estimated cu-in-concentrate production to 791kt (100% basis) for FY09 and now expect total Escondida copper production to approximate 1.07mt (100% basis), down 340kt or 24% YoY.

A godsend for the copper market?
In a global context, Escondida is forecast to generate ~7% of global copper supply in CY08. Interestingly, the additional (and unexpected) loss of 140kt of cu-in-concentrate production compares with forecast surpluses for CY08 and CY09 of 271kt and 474kt respectively. While uncertainty on the demand side of the equation ensures such forecasts are a moving feast, the loss of supply at Escondida looks like a godsend in a weakening demand environment. Moreover, we suspect this announcement will be the first of many for the supply-side should producers respond to lower prices by prioritising long overdue maintenance (after years
of running flat out!).