By Geena Paul
SANTIAGO (Commodity Online): Chile witnessed its worst earthquake in 100 years on Saturday and hundreds of people were killed. Thousands of building collapsed and roads and power lines were also damaged in the 8.8 earthquake which even caused a tsunami in the Pacific.

However, the Chile quake is all set to cause a major boost in copper prices. Chile is a nation with rich mineral deposits. But the quake has caused major power cuts and the damage in several cities will hamper production plans of almost all major copper producers in the country. This will affect the market and if China continues its buying plans, copper will see a bull run in the coming days.

Chile is the world’s largest producer of cooper. It has the world’s most productive mine at Chuquicamanta (in the northern region). Northern Chile also has rich, high-grade iron-ore deposits, mainly in the Coquimbo area. Most of the ore is exported, and the rest is used by the local iron and steel industry.

Chile has the largest deposits of nitrate, in the Atacama Desert in the north. The mining and exporting of nitrate (used for fertilizers and for the production of high explosives) fluorished during the last quarter of the nineteenth and first quarter of the twentieth centuries. Other minerals produced in the country include gold, silver, molybdenum, manganese, zinc, lead, baixite, sulfur, and potash. Uranium, cobalt, antimony, and tungsten are also mined.

According to reports at least four copper mines which produce about 16 per cent of the country’s output and two oil refineries have already halted operations.

Codelco, the world’s biggest copper producer, said its El Teniente and Andina copper mines halted operations after the temblor disrupted electricity supply. Anglo American Plc said its Los Bronces and El Soldado mines in Chile stopped operating for the same reason. Empresa Nacional de Petroleo shut its Bio Bio and Aconcagua refineries.

Copper exports made up about half of Chile’s $53 billion of exports last year. State-owned Codelco produces about 600,000 tonnes of the metal a year from El Teniente, the world’s biggest underground copper mine, and from Andina.

However, copper mines in northern Chile operated by BHP Billiton Ltd weren’t affected by the earthquake.

Transportation will be impacted by damage to highways and from a lack of fuel. The country’s main highway has been severed and bridges destroyed. Mine workers’ apartment buildings have also been destroyed.

Most of Chile’s key mining industry is based in the north of the country. The quake struck in central Chile. Many of the more distant mines rely on diesel to power generators to provide electricity and disruption to supply -- either due to problems at the nations oil refineries, near the epicentre of the quake, or because the fuel is diverted to help with the relief effort -- could have implications for output.

Chile hosts about 30% of the globes known copper resources and accounts for over 35% of global copper production. Owing to a global increase in copper prices, Chile and other major copper-producing countries have experienced notable economic growth in the last decade.

The country’s copper production accounts for 40% of the world's annual output, with state owned Codelco remaining one of the country's largest copper producers, producing 74% of the country's copper in 2003 compared to 33% in 2002.

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