Almost 5% of Global Copper Output Disrupted, Standard Bank Says

March 1 (Bloomberg) -- Walter de Wet, a London-based analyst at Standard Bank Plc, comments on the impact from the Chile earthquake in an e-mail today.

The major mines affected by the earthquake are Codelco's El Teniente and Andina mines, as well as Anglo American Plc's Los Bronces and El Soldado mines, he said. Copper on the London Metal Exchange jumped as much as 5.6 percent to $7,600 a metric ton, the highest price since Jan. 20, before trading at $7,460 a ton at 10:47 a.m. Singapore time.

On the impact of the earthquake on copper output:

"Chile is the world's largest copper producer, representing almost a third of global copper production. The impact on copper production appears to be limited for now but should not be insignificant in a copper market that continues to see a chronic underperforming supply-side.

"The epicentre of the earthquake was southwest of the capital Santiago. The country's largest copper mines are to the north. But there was sufficient infrastructure damage to the country, especially to power supply, that around 17 percent of the country's copper production was disrupted. Seventeen percent of Chile's copper production equates to almost 5 percent of world copper production."

On the potential loss of supply:

"Between the four major mines which reported suspension of operations, average production is 2,500 metric tons per day. This is not much, but several days of lost production may wipe out a sizable portion of the copper surplus we estimate for 2010.

"Our latest demand and supply balance put the copper market in a 125,000-ton surplus in 2010. Ten days of production losses at the four mines mentioned could wipe out a fifth of the copper surplus for the year. However, indications are that most mining operations should restart soon.

"Before the weekend, we estimated unplanned shortfalls in copper production were approaching 1 million tons for 2010, mainly due to a number of disruptions that have spilled over from last year. The current disruptions in Chile should add to this number and increase support for copper prices."

On Chilean exports:

"Apart from mine production of copper, copper exports from Chile look to be largely unaffected. While port activities at San Antonio are closed, the larger and more important ports of Antofagasta and Mejillones were unaffected by the quake. Given that copper mines should have some above-ground stock, as long as ports are open, the export of copper from Chile may see little disruption.”