Aug. 2 (Bloomberg) -- Copper prices rose in London as labor disputes and mine disruptions in Chile curb supply amid growing demand for the metal used in wiring and plumbing.

Copper gained 78 percent this year, partly because of output delays and strikes in countries including Mexico, Chile and Indonesia. A looming stoppage at Escondida, the world's biggest copper mine, may limit supply. Production at Codelco's Chuquicamata mine was cut by a July 23 rockslide.

``Those are the two biggest open-pit mines in the world, so everyone's watching them,'' said Herwig Schmidt, a London-based trader at Triland Metals Ltd., one of the 11 companies trading on the floor of the London Metal Exchange. Even with a strike settlement, copper probably will gain because ``demand seems to be quite good still,'' Schmidt said.

Copper for delivery in three months rose $45, or 0.6 percent, to $7,815 a metric ton at 6:42 p.m. on the LME. The metal reached a record $8,800 on May 11. Prices have more than doubled from a year ago.

On the Comex division of the New York Mercantile Exchange, copper for September delivery fell 0.2 cent to $3.591 a pound. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.

Workers at Escondida voted July 28 to stop work from Aug. 7, saying the company's wage offer is too low. Miners, who claimed the slowdown cut production by 40 percent, want a pay increase 13 percentage points above Chile's inflation rate. Management offered 1.5 points. Both sides are in talks.

Piece of the Action

``When you have very high prices, everyone wants a piece of the action,'' said Charles Kernot, director of metals and mining at London-based Seymour Pierce Group Plc. ``When metals prices fall back, that can cause huge problems for the company.''

Alejandra Wood, a spokeswoman for BHP Billiton in Santiago, also said today that management expects to make a new offer to miners and declined to provide details. She denied union claims that production has slowed by 40 percent. Pedro Marin, spokesman for the Escondida Workers' Union No. 1, said he expects the strike to take place on Aug. 7.

Concerns about supply disruptions and declines in production will support prices in the short-term, analysts say.

Extending Rally

Copper will rise through 2006, extending a five-year rally as output fails to keep up with demand, UBS AG, Europe's largest bank by assets, said in a report today. Copper for immediate delivery will average $6,755 a ton in London this year, 10 percent higher than a previous estimate, London-based analyst Daniel Brebner said in a report today.

Chile's state-owned Codelco, the world's biggest copper- mining company, will need about three months to make repairs following a rockslide at its largest mine, Executive President Jose Pablo Arellano said at the company's headquarters in Santiago today.

Arellano also said current production losses because of the rockslide are about 576 tons of copper a day. Codelco said on July 25 that the accident has reduced output by 960 tons a day.

``These factors have helped to keep the copper price up at these very high levels,'' Seymour Pierce's Kernot said. ``So far, there seems to be little in the way of downward pressure.''

An index of LME base metals, including copper, lead and zinc, gained 85 percent in the past year. The Morgan Stanley Capital International World Index, which measures stocks in 23 major markets, has climbed 11 percent in the past 12 months. The MSCI World Sovereign Index, which includes the debt of 21 major markets, has climbed 1.1 percent.

``There's a strong underpinning for commodity prices,'' Xstrata Plc Chief Executive Officer Mick Davis said today in an interview in London. ``Prices are going to remain strong for quite a long period of time.''

To contact the reporters on this story: Katy Watson in London at kwatson@bloomberg.net; Sarah Tolkoff in Chicago at stolkoff@bloomberg.net.

Last Updated: August 2, 2006 13:47 EDT