This morning in metals news, the strike at Freeport McRoRan’s Grasberg copper mine was extended for a second month, oil prices rose in expectation of supply cuts, and silver prices reached a three-week high.
Freeport Indonesia Strike Extended
This past Saturday, the union representing thousands of workers at Freeport’s Grasberg copper mine in Papua, Indonesia announced that the ongoing strike will be extended beyond May 30, Reuters reported. As union industrial relations officer Tri Puspital told Reuters, “We will extend the strike for 30 more days.” Approximately 9,000 workers are participating in the strike.
The reason for the strike revolves around employment. Last month, Freeport laid off about 10% of its 32,000 workers to cut costs, which accrued to the tune of millions thanks to an ongoing dispute with the Indonesian government over rights to the Grasberg mine. “With this problematic combination of protests from workers and tensions with the Indonesian government,” wrote MetalMiner analyst Raul de Frutos earlier this month, “it’s no wonder that investors are concerned about further supply disruptions this year.” It looks like supply disruptions will continue.
A Key Week for Oil
One hopes that this will be the only time when news source after news source mentions Saudi Arabia and glowing orbs in the same headline. In more important news, Bloomberg reported yesterday that Saudi Arabia has received Iraq’s support to extend oil output cuts for nine months, after Saudi Minister of Energy Khalid Al-Falih flew to Baghdad to talk to Jabar al-Luaibi, his Iraqi counterpart.
Iraq, the second largest producer in the Organization of Petroleum Exporting Countries (OPEC), had been reluctant to reduce oil supply, agreeing initially to prolong the cuts for only six months. OPEC will meet in Vienna on Thursday to make the official decision. Meanwhile, oil prices rose on the expectation that the nine-month prolongation will be passed, settling at a one-month high.
Silver Price is Up, While Gold Stays Put
Let’s conclude with a look at precious metal prices. BullionVault reported that the price of silver has hit a three-week high, reaching $17.08 per ounce yesterday. Gold prices, however, remain unchanged for now.