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Freeport-McMoRan Copper & Gold declared force majeure on some concentrate sales from its strike-hit Grasberg mine in Papua on Wednesday, a move that kept benchmark copper prices close to a one-month high.

Freeport’s decision frees it from some of its contractual obligations to supply buyers of metal produced at the world’s second-largest copper mine. The news buoyed copper prices on the London Metal Exchange on Wednesday and the benchmark contract rose as much as 3.5 percent to $7,785 a tonne. That was just below a one-month peak of $7,820 hit on Tuesday.

Grasbeg holds the greatest gold and copper reserves in the world and also produces silver. A monthlong strike over pay and conditions, road blockades and damage to a pipeline have hit output at the open-pit mine.

“The lower concentrate production has impacted our ability to fully perform our sales commitments and as a result, we were required to declare force majeure on the affected concentrate sales agreements,” Freeport Indonesia spokesman Ramdani Sirait said.

“It is almost a certainty that Freeport’s declaration of force majeure has supported copper prices today,” said Gavin Wendt, a mining analyst. “News of the strike isn’t new but the situation hasn’t been improving.

Analysts also said that the declaration came at the same time that many miners and smelters were involved in negotiations on fees for processing copper. The declaration would likely support the miners’ position in those negotiations as there would be less raw material to process, forcing smelters to be more competitive on fees for taking on the work.

The company said last week that an eight-day strike in July and the second, continuing strike at Grasberg led to a loss of about 70 million pounds of copper and 100,000 ounces of gold in the third quarter. It also cut its sales forecast for 2012.

Reuters