Reuters reported that a prolonged strike at Chile's Escondida copper mine could push a global shortfall of copper concentrate deeper into deficit this year, driving smelting and refining charges lower. Failure to reach accord soon at Escondida, which extracts seven percent of the world's copper, will have serious implications for copper prices, already trading near record highs on the prospect of a shortfall in supply this year. This looming shortfall pushed the market to a record of USD 10,190 per tonne in mid-February. Since then, project delays and supply disruptions at mines worldwide have continued to affect copper production and play a major role in the continuing supply shortage. London Metal Exchange three month copper was fetching USD 9,821.50 per tonne ahead of LME ring trading on Wednesday. A metals trader at a commodity brokerage in Sydney said that is the situation in Escondida capable of putting copper back above USD 10,000? If it doesn't go away soon yes. The strike took the market by surprise. It will be more than a year before production starts at the giant Oyu Tolgoi copper mine in Mongolia the only new supply source on the horizon big enough to replace lost output from Escondida and even then it will face a lengthy ramp up time. The global flow of copper concentrates was only slightly below demand until the wildcat strike halted operations at the giant Escondida mine majority owned by BHP Billiton. Before the strike, BHP Billiton was expecting to yield about 1.1 million tonnes of copper metal from concentrate and cathode operations this year, almost identical to last year. An end to the strike appeared distant after union representatives snubbed government mediation, refusing a labor authority invitation to talks and taking a hard line that could prolong the disruption. Escondida's management is refusing to talk to workers as long as they continue their strike. Prior to the Escondida stoppage, AME Group was forecasting 2011 global copper concentrate supplies would climb 6% to 13.251 million tonnes against demand of 13.395 million. Mr Ben Westmore commodity economist of National Australia Bank said that "There's no doubt that this raises the risk that the deficit will be bigger than the market is expecting. All the big mines are suffering from lower grades and there's not a lot of spare capacity around.” Smelter sources said that the stoppage came out of the blue last week, the latest event in a wave of labor unrest hitting Chile and as far as Indonesia as workers demand more from a copper price bonanza fed by China's ravenous appetite for the metal. BHP Billiton is estimated to have contracted to provide around 400,000 tonnes of Escondida concentrates to Chinese smelters alone in 2011 or a shipment of roughly 33,000 tonnes per month. Mr Jeremy Goldwyn principal metals analyst for the Goldwyn Partnership in Adelaide said that "If this strike was to go on for a month or more, it could take a real bite out of the market and we'd start to see a coming off in treatment and refining charges." Mr Natalie Robertson commodities analyst of Australia & New Zealand Bank said that ANZ may revise up its forecast for a global copper deficit of 544,000 tonnes this year to take into account the Escondida stoppage. The estimated 15,000 tonnes in output lost since the strike began five days ago account for more than two thirds of daily copper usage in China, the world's top consumer.

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