Zambia power cuts feed copper supply worries, lift prices
Power restrictions could hit output at First Quantum’s Kansanshi mine. (Image courtesy of First Quantum)
Copper prices were on their way up Tuesday, after touching a six-year low the day before, as Zambian power utility Zesco Ltd announced power supply cuts that will affect all customers, including mining companies.
Futures for September delivery jump 2% in New York to $2.4015 a pound at 10:51AM, heading for the biggest gain in two weeks, after they touched $2.3375 on Monday, the lowest since 2009.
On the London Metal Exchange, copper for three-month delivery climbed 2.2% to $5,302 a ton (or $2.41 a pound).
The industrial metal has lost almost 20% of its value from a May 5 peak, just steps away of meeting the common definition of a bear market.
Canada’s First Quantum Minerals (TSX:FM), Zambia’s largest foreign investor, warned Monday that the power restrictions could hit output at its Kansanshi mine. While Toronto-based analyst at TD Securities Inc., Greg Barnes, said the measure also threatens the miner’s progress at its Cobre Panama project in Latin America because of a potential liquidity squeeze, Bloomberg reports.
Other foreign firms that will be affected by the cuts include Barrick Gold , Glencore , and Vedanta Resources.