METALS-London copper rises on Chile production drop

By Lucas Liew

Oct 1 (Reuters) - London copper edged higher on Wednesday, driven by supply concerns after output in top producer Chile fell the most in more than two years in August.

Three-month copper on the London Metal Exchange CMCU3 gained 0.52% to $10,322 per metric ton by 0708 GMT. Markets in China are closed from October 1 to 8 for the National Day holiday.

Chile's output fell 9.9% year-on-year in August after an accident at Codelco's flagship mine on July 31.

The company, the world's top copper producer, was forced to halt mining and smelting operations, which knocked 33,000 metric tons off the facility's forecast output for 2025.

Elsewhere, Freeport-McMoRan was in discussions with the Indonesian government regarding rights to operate the Grasberg copper mine past 2041.

Freeport declared force majeure at the mine last month due to torrential mudslides, which killed two workers. The world's second-largest copper mine is not expected to return to pre-accident operating rates until at least 2027.

BHP BHP.AX announced plans to invest more than $555 million in its Olympic Dam copper operations in South Australia to double output from the state, which holds one of the world's largest deposits of copper.

Meanwhile, the dollar index =USD, which measures the U.S. currency against six major peers, hovered near a one-week low as the U.S. government shutdown started. USD/

A softer dollar makes greenback-denominated assets more affordable to holders of other currencies. FRX/

Copper inventories in Shanghai warehouses fell 3.8% from last Friday, while lead inventories fell 14.9%. The weekly stock report was published early ahead of the National Day holiday.

Among other London metals, aluminium CMAL3 climbed 0.41% to $2,691.5 a ton, lead CMPB3 rose 0.3% to $1,994.5, zinc CMZN3 edged up 0.68% to $2,980, nickel CMNI3 gained 0.23% to $15,270, and tin CMSN3 strengthened 0.11% to $35,450.

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