Olympic Dam Mishap May Take 50,000T Off Copper Market - Macquarie

SYDNEY, Oct. 9 -- The world copper market stands to lose 50,000 tonnes of supply this year and tip back into defict after a mechanical failure at Australia's giant Olympic Dam mine cut production capacity by 80 percent, Macquarie Bank said on Thursday.

    A BHP Billiton spokeswoman said it was too early to determine how much production would be affected because an investigation into the incident was not yet complete.

    A breakdown of a main ore transport system at the mine on Tuesday had severely affected ore processing, Macquarie said in a client note.

    A runaway skip, or ore carrier, forced the immediate shutdown of the underground mine's main haulage system and the activation of a smaller secondary system that can handle only about 20 percent of haulage, Macquarie said.

    The loss would help swing world copper markets from a current 30,000-tonne surplus into defict, according to the bank.

    "A projected loss in the order of 50,000 tonnes of finished copper from Olympic Dam over the next six months (together with an end to destocking in the world ex-China) is set to restore a market balance," Macquarie said.

    Olympic Dam produced 194,000 tonnes of copper and 4,000 tonnes of uranium in the year ended June 30 2009.

    The mine also stood to lose about 830 tonnes of uranium, according to Macquarie.

    BHP Billiton has been studying a proposal that would lift annual production at the mine to 730,000 tonnes of copper and 19,000 tonnes of uranium.

    (Source: Reuters)