The world's No. 3 copper mine, Collahuasi, scrambled on Tuesday to find a new way to ship metal and generate cash after an accident shut its Patache port terminal, strangling its exports as copper prices hit new highs.
The mine talked with officials at the nearby Patillos port to see if it could ship copper concentrates from there, port Administrator Juan Villacorta said. But he cautioned shipping concentrates from Patillos posed technical and environmental challenges as it normally ships salt.
Three workers died in the weekend mishap at Patache and on Monday Collahuasi, owned by Anglo American
The mine's severed shipments contributed to copper rising about $320 a tone in London over the past two days to an all-time high of $9,392 on Tuesday.
Collahuasi represents more than a third of Anglo American's annual copper output and about a quarter of Xstrata's mined copper, according to available data. But share prices of each company rose more than 3 percent on Tuesday, shrugging off the stoppage as they are diversified into other metals.
No shipments can be made out of Patache for an undetermined period of time, until the structure is repaired. Collahuasi has said it is searching for alternatives to ship its concentrate, said Bernardita Fernandez, a mine official.
Despite talks with the Patillos port, some said the mine might have a hard time finding an alternative port.
I think the market doesn't really understand the real impact of the news yet, said a industry expert who asked not to be named because he speaks regularly with the company. This is a very complicated logistical situation.
The Patache terminal could be down for at least a month for repairs, a senior port official told Reuters. The mine operator described the damage as severe.
So far, Chinese smelters have seen little impact on their output as they have plenty of concentrate stocks on hand.
But the stalled shipments, coming on the heels of a month-long strike at the mine, may hurt Collahuasi's profits.
About 88 percent of Collahuasi's output is copper concentrate, three-quarters of which was exported at Patache. The rest of the mine's production is for cathodes, some of which are exported elsewhere.
Collahuasi produced 43,126 tones of copper cathodes and 492,727 tones of concentrate in 2009, about 3.3 percent of the world's mined copper.
The mine said production continued at the mine and that it had extra storage capacity for copper not being shipped.
But some traders said limited inventory capacity could force Collahuasi to slow output, if it is not able to find another port to help ship its copper for some time.
(Additional reporting by Brad Haynes; Writing by Terry Wade; Editing by Walter Bagley and Sofina Mirza-Reid)