Copper prices were buoyed on Friday by the prospect of a strike at a Peruvian mine, while Bolivia’s leftist president Evo Morales has put a shudder through the mining industry by nationalising Glencore’s tin, zinc and lead operations there.

The trend for governments to take advantage of the windfall profits being generated by miners is continuing, with Zambia becoming latest to increase taxes, this time on copper miners.

Copper prices have fallen 15 per cent since January, but on Friday the prospect of a strike at Southern Copper’s Ilo copper smelter in Peru helped the red metal rise 3 per cent, or $2.53 a pound, to $US5580 on the London Metal Exchange.

Copper prices have been falling as inventories rise, indicating that market has moved into surplus.

Key for copper is now whether Chinese demand will kick higher after the Lunar New Year festivities, starting on February 18.

A monthly report from Fortis, an investment bank, said there were as yet no signs of a big upsurge in Chinese buying despite prices falling steeply.

Mr Morales seized Glencore’s Sinchi Wara Bolivian unit on Friday, saying former president Gonzalo Sanchez de Losada had illegally privatised the five mine operation in the 1990s.

Mr Morales has ruled out paying any compensation to Glencore, which is now challenging the nationalisation in court. Elected last year, Mr Morales has already moved to take control of the impoverished country’s oil and gas assets.

“We’ve started to give Bolivia its dignity,” Mr Morales said.

The mines, which account for 10 per cent of the world’s tin production, have been tipped into a new state-owned metal company, Vinto Metallurgical Co.

Mr Morales intends to invest $10 million in modernising the site. The money will come from close ally Venezuela.

In Zambia, the Government is increasing its sales tax on copper fivefold, from 0.6 per cent to 3 per cent. Major miners affected include Glencore and Vedanta.

The company tax on miners is also rising to 30 per cent from 25 per cent. Copper accounts for about 70 per cent of Zambia’s export income.

Rising political risk to miners in Latin America and Africa could add to increasing costs that miners are facing as they race to increase production to meet rising demand out of China. Demand should be sustained by industrialisation in India and Brazil.

Zinc rose slightly on Friday to $US3130 versus Thursday’s close of $US3127.50.

Aluminium was at $US2700 against $US2690 on Thursday.

While aluminium stocks are up, prices are being helped by fears of continued strikes in Guinea, which could hit the bauxite and alumina industry there.

Nickel ended at $US36,200 against $US35,475 on Thursday.

Tin was up at $US12,325 against $US12,100 and lead traded higher at $US1625 against $US1575.

source news : www.theaustralian.news.com.au

Find More Other News : Company, Exploration, Mine Trade & Market, Mining Top News, Oil & Gas, Petroleum