Strike threat at SPCC mines boosts copper prices

Workers at Southern Peru Copper's (SPCC; NYSE: PCU) Cuajone and Toquepala copper mines in southern Peru are threatening to start an indefinite strike from August 31, analysts at Barclays Capital reported. The development is price supportive, said the bank's analysts. True to form, copper's spot price rose 1.8% to US$1.270/lb from Wednesday's close of US$1.247/lb. Cuajone and Toquepala, in southern Peru's Moquegua and Tacna departments respectively, have combined production of some 350,000t/y of the red metal. Cuajone union leader Elmer Gallegos said workers were also opposed to the proposed transfer of Grupo Mexico's shares in mining unit Minera Mexico to SPCC, press reported. Rumors have been flying that the transfer would lead to SPCC paying less tax in Peru and reduced workers' participation payments, which are based on profits. SPCC issued a statement earlier this week clarifying that if the deal goes through Minera Mexico would not be transferred to its Peruvian "branch," a separate company which operates under Peruvian laws, but to the Delaware-listed parent company SPCC. SPCC spokesperson Guillermo Vidalón was not immediately available to comment Thursday on the strike threat. SPCC also operates the Ilo copper smelter-refinery in Moquegua department.