March 25, 2015 / 7:59 PM / in 3 years

UPDATE 3-Miners suspend operations in Chile as heavy rains flood roads

(Recasts; adds BHP Billiton statement, mining minister comment)

By Fabian Cambero

SANTIAGO, March 25 (Reuters) - Torrential downpours in the north of Chile, the world’s biggest copper producer, have forced companies to suspend operations at several of the area’s major mines, putting an estimated 1.5 million tonnes of capacity of the red metal on hold.

The country, which produces a third of the world’s copper, is likely experiencing the largest impact on output since an April 2014 earthquake.

The unusually heavy rains in the desert region have caused mudslides and rivers to breach their banks, leaving residents stranded, flooding cities, and cutting power supply.

World No. 1 copper miner Codelco suspended mining operations at its Chuquicamata, Ministro Hales, Radomiro Tomic, Gabriela Mistral, and Salvador deposits due to the state of roads and mine access following the rains, the state-run firm said on Wednesday.

Those mines accounted for about 59 percent of the 1.67 million tonnes of copper Codelco produced in 2014.

The plants at Gabriela Mistral, Radomiro Tomic and Salvador were operating with mineral stocks, Codelco said, but was not able to say if the same applied to the other two mines.

News of the closures briefly jolted COMEX copper futures in afternoon trade in New York. Prices nearly returned to positive territory in a kneejerk reaction, but quickly fell back as oversupplies and weak demand weighed on sentiment.

LIMITED LONG-TERM IMPACT

While the rains may be a headache for producers, market participants said they would have little impact on output from Chile in the long term.

“This is a logistical bottleneck as opposed to a major calamitous event like a landslide or an earthquake,” said Edward Meir at broker INTL FCStone in New York.

Mining minister Aurora Williams said there had not been any significant damage to large- and medium-sized mines, and the suspensions were preventative.

Other mines affected by the rains include Antofagasta’s Michilla mine and Centinela copper complex, Anglo American PLC’s Mantoverde and Lundin Mining Corp’s Candelaria.

BHP Billiton did not confirm whether its Escondida operation, the world’s largest copper mine, had been affected.

“We continue to monitor the situation to ensure the safety of our employees and assess the impacts on our sites,” said a BHP Billiton company spokeswoman.

Telephone services have been knocked out by the rains, making communication with the area difficult.

Additional reporting by Josephine Mason in New York; writing by Anthony Esposito and Rosalba O'Brien, editing by Chizu Nomiyama, Alan Crosby, G Crosse and Phil Berlowitz

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