SYDNEY (Reuters) - The world’s fourth biggest copper deposit Australia’s Olympic Dam remained indefinitely idle on Friday and production at some of the country’s major steelworks halted, after a massive power outage, disrupting supply lines of raw materials to Asia.
The power outage across South Australia state on Wednesday, caused by severe storms, has paralysed some of the world’s largest sources of copper, uranium, lead and precious metals.
BHP Billiton said on Friday said it could not say when it would be able to restart its Olympic Dam mine, which is also the world’s single biggest supplier of uranium.
“We just don’t know at this stage,” a spokesman said.
Prices on the London Metal Exchange have started to rise as commodities traders bet on Asian buyers scouring raw materials elsewhere.
Lead futures galloped to the highest price in 16 months after the world’s biggest lead smelter, located in South Australia and a key supplier to Chinese battery manufacturers, went down due to power failure.
The owner of the smelter, which churns out 185,000 tonnes of lead annually for customers in Asia, Belgium-based Nyrstar, warned it could be two weeks before operations resume.
“You can’t remove this much metal from the market for that amount of time and not expect people to scramble around for new supplies,” said a metals traders in Sydney, who has been buying lead futures since the storm hit on Wednesday.
South Australia’s Whyalla steelworks, which competes directly with Chinese producers of steel reinforcing bar and long products, has seen production halt after molten metal started cooling and solidifying in its blast furnace.
Production of 3,500 tonnes of steel a day and nearby mining of iron ore to feed the mill have stopped and it could be up to a week before power is restored, the mill’s financial administrator, Mark Mentha, said.
While most of South Australia’s ports reopened on Friday and ground transport was returning to normal, there may be little to put on ships.
“This storm is unlike anything we’d seen before and it’s hard to say when things will get back to normal,” a spokesman for the ports said.
Nigel Long, acting chief executive of the South Australian Chamber of Mines and Energy warned the state risks an exodus of investment in raw materials.
“If the security of electricity cannot be guaranteed, then the resources industry is likely to look elsewhere,” Long said.
Australia over the past two decades shifted its economic reliance from Europe and the United States to the emerging Asian powerhouses, which have come to regard the country as “Asia’s quarry.”
Countries including France, China, India and Japan rely on uranium from Australia to power nuclear generators, the majority of which is mined in South Australia.
Additional reporting by Jonathan Barrett; Editing by Michael Perry