Sterlite, Hindalco should benefit.

Accumulate on dips.

SYDNEY (XFN-ASIA) - Copper prices are likely to go up overnight after BHP Billiton reportedly declared force majeure on the delivery of copper concentrate from its Escondida copper mine in northern Chile, UBS resources analyst Glynn Lawcock said.

He said the move, which follows industrial action at the world's largest copper mine, is unlikely to cause short-term supply difficulties as there remains plenty of copper concentrate in the system.

BHP Billiton is yet to issue a statement and company representatives in Australia were not available for comment.

Force majeure is a common clause in contracts which essentially frees one or both parties from liability or obligation when an extraordinary event beyond the control of the parties prevents the fulfillment of obligations under a contract.

The concentrate is piped from the 57.5 pct-owned BHP Billiton project in the Atacama desert to the Port of Antofagasta for export.

Escondida accounts for about 8 pct of the world's copper output.

Lawcock noted that the threat of an industrial action has already seen the copper price spike to around 4.00 usd a pound from 3.61 usd, even before Escondida's workforce decided to lay down their tools if their demands for higher wages and bonuses were not met.

He said resolution of the dispute is particularly important for BHP Billiton, which relies on Escondida for about 80 pct of its copper production.

Rio Tinto has a 30 pct interest in Escondida but the mine accounts for less than 50 pct of its worldwide copper production.

At 3:30 pm here, BHP Billiton (BHP.ASX) was down 0.12 aud or 0.43 pct at 27.49 while Rio Tinto was up 0.52 or 0.69 pct at 75.49

Copper hits $8,000 on Chile strike

LONDON: Copper futures mounted an assault on $8,000 per tonne yesterday as the market reacted to the start of a strike at the world's biggest source of the metal.

More than 2,000 union workers began a strike at the Escondida mine in Chile after talks on a new wage contract failed despite 11th-hour government mediation, the union said.

Copper for delivery in three months on the London Metal Exchange touched $8,030 in early trade before the strike began, up $170 from Friday's closing price. It slipped in the middle of the day, but rose after the start of the strike and its closing price was $7,930.

Daily output at the mine has been cut to about 40% of normal by the strike, majority owner BHP Billiton said.

Though the walkout was well-flagged, few speculators would want to be sitting on short futures positions, a trader said.

Fund managers drawn to copper futures said tight supply and strong demand were the long-term driving factors.

"We will be buying it no matter what," a European fund manager with over $100mn in assets said.

"The performance of base metals has been huge, and we'll be increasing our base metals exposure again today."

At $8,000, copper is almost $1,000 below the record high it hit in May but more than four times more expensive than it was three years ago.

Lack of new supply and dwindling stocks meant little surplus metal was in the system, which would support prices, investment bank UBS said.

"We still see industrial metal prices peaking next year and favour copper, platinum and zinc," strategist John Reade said in a note.

Aluminium traded up to $2,570 per tonne, $31 above Friday's close, and gold reached $651.80 per ounce, up $7.80 from Friday's late quote in New York. Mining stocks fell in London as equity markets were dragged down by high oil prices.