Chile says copper cargo on stranded vessel intact

A ship carrying copper concentrate to India from mines owned by BHP Billiton Ltd., Xstrata Plc and Anglo American Plc ran aground off Chile, deepening a squeeze on supplies of the raw material used by smelters.

The Ocean Crown had about 50,000 metric tons of the commodity, BHP spokesman Illtud Harri said today in an e-mail. Of that, 43,478 tons came from BHP's operation at Escondida, the world's largest copper mine, he said.

The copper-concentrate market is ``extremely tight,'' Jim Lennon and Adam Rowley, analysts in London at Macquarie Bank Ltd., Australia's largest investment bank, said in a report today. The bank raised its copper-price forecast by 5.6 percent for this year and 7.7 percent for 2008 to reflect the shortage.

Copper for delivery in three months on the London Metal Exchange rose $105, or 1.4 percent, to $7,555 a ton.

The 52,347-ton Cypriot-flagged Ocean Crown was loaded at Caleta Patache in Chile and grounded Aug. 7 as it made its way through the Darwin Channel, suffering ``extensive'' damage, according to Kyriakos Mitsotakis, operational manager of Five Oceans Salvage Consultants Ltd., the Athens-based company handling the salvage operation. Mitsotakis, speaking by phone, wasn't able to say whether the ship is salvageable or how long the recovery will take.

Indian Customers

The ship's cargo is unharmed and bad weather has delayed salvage operations, according to the operations department of the Chilean navy's Maritime Authority of Puerto Montt. The ship may remain in place for at least two more days as strong currents hamper efforts to free the vessel.

The ship probably will be taken to a nearby bay for at least five days for repairs before it can sail to a port and transfer its cargo, the operations department said.

Five thousands tons of the cargo was from the Collahuasi copper mine in Chile, which is owned by Xstrata and Anglo American, Xstrata spokeswoman Claire Divver said in a phone interview from London. The ship had 25,000 tons of concentrate on board and ran aground Aug. 9, she said.

BHP, based in Melbourne, is working with its Indian customers to mitigate any impact from the grounding, Harri said by telephone from London. He declined to disclose the customers' identities or say whether they may be compensated.

The ownership of concentrate from Collahuasi was transferred at loading and Xstrata isn't responsible for any loss, Divver said.

The ship was bound for the port of Dahej in India, Mitsotakis said. Dahej, in the state of Gujarat, is home to the Birla copper smelter owned by Hindalco Industries Ltd., India's largest producer of nonferrous metals. Pragnya Ram, a spokeswoman for Mumbai-based Hindalco, declined to confirm or deny whether the company is an owner of the raw material on board the ship.

Destined for Vedanta

The concentrate from Escondida was destined for Vedanta Resources Plc, two people with knowledge of the matter said today, declining to be identified because of commercial confidentiality. Vedanta, India's largest copper producer, wouldn't confirm or deny that the raw material was headed for its plants, a London-based spokesman said.

American Metal Market reported the ship's grounding on Aug. 10, citing people it didn't identify. The ship carried about 40,000 tons of concentrate, the industry publication said.