Watch out for Sterlite, Hindustan Copper.

Copper Surges as BHP Closes Chile's Escondida, World's Top Mine

Aug. 18 (Bloomberg) -- Copper prices rose after BHP Billiton shut down the world's biggest copper mine and called off talks with a striking labor union after workers blockaded roads to the Escondida site in Chile.

BHP, the world's largest miner, will take legal action against the union over the obstruction, spokeswoman Emma Meade said in an e-mail from the Melbourne-based company. The strike at the mine, which accounted for 8.5 percent of all mined copper worldwide last year, started Aug. 7. Before today's closure, production had fallen by about half.

The interruption to output from Escondida and the escalation of the labor dispute will exacerbate investors' concerns that global supplies of the metal can't meet demand. Copper futures in London touched a record $8,800 a ton in May.

``The union is now playing hard ball,'' said Rob Clifford, an analyst at ABN Amro Holding NV in Melbourne. ``Production at the mine will drop to zero from 40 percent.''

Copper for three-month delivery rose as much as $195, or 2.7 percent, to $7,485, a metric ton on the London Metal Exchange and traded at that level at 6:47 a.m. local time.

Metal for delivery in December jumped 5.3 cents, or 1.6 percent, to $3.368 a pound on the Comex division of the New York Mercantile Exchange at 1:49 p.m. Singapore time in after-hours trade.

The union, the Escondida's Workers' Union No. 1, wants wages increased by 10 percentage points above inflation, which was 3.8 percent annually in July, having reduced an initial demand for a 13 point wage increase. Union leaders have said workers' wages need to reflect the surge in copper prices. BHP has offered a rise of 3 percentage points above inflation.

BHP Billiton owns 57.5 percent of Escondida. Rio Tinto owns 30 percent, while a group led by Mitsubishi Corp. owns 10 percent. The International Finance Corp. owns the rest.