* Reductions from Escondido, Grasberg could cut output 5,000
* Escondido union warns strike could be lengthy this time
* Freeport still trying to work out permit renewal for Papua
(Recasts to focus on supply disruptions at world's two biggest
By Wilda Asmarini
JAKARTA, Feb 8 Disruptions at the world's two
biggest copper mines by strikes and other issues this week are
threatening to reduce global supplies of the metal, pushing
benchmark prices back towards their highest levels for the year
BHP Billiton said it would halt output in Chile at
its Escondida mine, the biggest copper producer, during a strike
to begin on Thursday. Freeport-McMoRan Inc warned it
will scale back output at its Grasberg mine in Indonesia, the
second-biggest, amid a smelter strike and issues over renewal of
its mining permit.
Three-month copper on the London Metal Exchange
gained more than 2 percent during trading on Wednesday to $5,925
a tonne on the supply threat, with analysts noting they had
already been expecting tighter supplies this year.
Standard Chartered estimated that more than 5,000 tonnes of
copper production would be lost each day that both BHP and
Freeport were curtailing or halting output at their mines.
In Indonesia, a strike at the country's biggest copper
smelter, which is Freeport's sole domestic offtaker of copper
concentrate, has added to the company's woes.
Freeport had warned last week it could be forced to cut
staff and production at Grasberg if it did not get a new export
permit by mid-February.
Freeport Indonesia spokesman Riza Pratama on Wednesday
confirmed by text message that the company planned to begin
copper output cuts.
"We are still negotiating with the government," Pratama told
Reuters, looking for a "way out so that we can export again."
Concentrate exports from the mine in Papua, Indonesia, were
halted on Jan. 12 as part of Indonesia's push to add value
domestically to natural resources.
In Chile, the main union for workers at Escondida said that
unlike other recent labour actions the strike scheduled for
Thursday could be lengthy.
Standard Chartered said a strike of 25 days would equate to
lost output of 85,000 tonnes, more than an expected global
surplus of 80,000 tonnes.
The threat of the output reductions also boosted Shanghai
Futures Exchange copper by nearly 2 percent.
Swiss investment bank UBS said tight copper supplies this
year, along with the disruptions, could push prices for the
metal to $3 a pound, or more than $6,600 a tonne, which would be
the highest for the metal since November 2014.
(Reporting by Wilda Asmarini; Additional reporting by Susan
Taylor; Writing by Fergus Jensen; Editing by Tom Hogue)