By Leia Michele Toovey- Exclusive to Copper Investing News

^[1]On Monday, copper lead gains in metals traded on the London Metal Exchange (LME) as the greenback retreated from its recent stronghold.

The dollar's recent run to new highs against the euro has extended losses for the metals; the recent pullback is getting people back in the bull mode for commodities. Adding a kink to the metal's rebound was the Wall Street shake-up seen earlier today, as Bank of America rescued Merrill Lynch and Lehman Brothers ^[2] (LEH.N) filed for bankruptcy protection.

Lehman Brothers was a player in base metals and its unwinding position in the commodity and derivatives section is causing some trouble. Lehman Brothers filed for bankruptcy protection on Monday after trying to finance too many risky assets with too little capital, making it the largest and highest-profile casualty of the global credit crisis. The LME said it had declared U.S. investment bank Lehman Brothers a defaulter and suspended it from trading on its select electronic trading system.

Although Wall Street plunged on Lehman's demise, this huge development failed to shake LME copper. Copper for delivery in three months advanced US$211, or 3 per cent, to US$7141 a tonne near closing on the Exchange, and is headed for a 3.5 per cent weekly gain. Indian copper futures did not behave as favourably as concerns about the health of the U.S. economy saw investors dumping base metals for safer assets. At 5.45 p.m. on Monday, the benchmark November copper MCCX8 on the Multi Commodity Exchange of India (MCX) was down 2.59 per cent at Rs 314.15 per kg.
Dropping stockpiles ^[3] are adding the currency fuelled readjustment of copper prices. Last week, there was a 29 per cent drop in copper stockpiles monitored by the Shanghai Futures Exchange. The announcement by BHP Billiton that the world's largest mine Escondida will decline between 10 and 15 per cent for the next two years added to concerns that supply will struggle to match demand. Copper stockpiles tracked by the Shanghai exchange slid to 13,554 tons, the lowest since record keeping began in January 2003.

The cumulative decline for the year now sits at 47 per cent. Total stockpiles. Including those at the LME and the Comex division of the New York Mercantile Exchange, are at 221,519 tons, or 4.3 days of global consumption. Partly responsible for the decline in stockpiles is the rise in industrial production in China, the world's largest consumer of industrial metals. Chinese industrial production expanded 12.8 per cent in August from a year earlier.

Freeport's McMoran's Grasberg mine, host of the world's third largest copper reserve, was the victim of a terrorist attack. A separatist group in Indonesia's Papua province claimed responsibility on Monday for a series of bomb attacks in the area and called for the closure of a controversial huge copper mine. A small bomb exploded near the remote province's Timika airport on Sunday after two blasts on Friday near a mine operated by Freeport McMoRan Copper & Gold Inc ^[4]. No casualties were reported in the explosions and Freeport's operations were not disrupted.

The mine has been a frequent source of controversy over its environmental impact and the share of revenue going to Papuans. Kelly Kwalik, chief of the Free Papua Movement (OPM), issued a letter to members of the group urging them to take action to push for the closure of Freeport's mine. The letter was obtained by the press on Monday and Kwalik is quoted as saying, "I as the highest commander of the OPM with a brave heart, issue this instruction for the closure of Freeport's mine because the presence of the company has been causing many problems leading to clashes among Papuan people." Kwalik is pushing that the issue of Papuan independence is discussed during the United Nations General Assembly meeting this month. Kwalik also claimed that his group was responsible for the recent attacks. The Grasberg mine accounts for 40 per cent of Freeport's total copper reserves of 93 billion pounds. Freeport is the world's largest publicly traded copper miner.