Mining Profits...Investing In Industrial Metals

Copper tumbled more than 4 per cent in London on Tuesday night amid concerns about oversupply and a slowdown in manufacturing, while oil traded at a seven-month low of $US58.27 a barrel.

The plunge in commodities reverberated through the Australian market yesterday, sending the S&P/ASX 300 Metals & Mining Index almost 4 per cent lower to 3203.1 points.

BHP shares plunged almost 5 per cent, losing $1.19 to $24.76, while Rio Tinto shed $1.99 to $68.01.

Copper for January delivery traded as low as $US7215 a tonne yesterday, from a close of $US7371 a tonne in London.

The price of copper, which is used in everything from electrical leads to motors, has fallen almost 20 per cent from its peak of $US8800 in May.

Perform A Background Check On Anyone, Anywhere

Analysts blamed the sharp fall this week on disappointing manufacturing figures in the United States and new forecasts by the International Copper Study Group (ICSG).

The ISM manufacturing index, which measures the health of the US manufacturing industry, fell to its lowest level in 18 months in September.

Chip Hanlon, president of Delta Global Advisors in California, said: "The soft economic data raises new fears that we are moving toward an economic recession and diminished demand for commodities."

Also weighing on the copper price was a report by the ICSG, which forecast a "modest surplus" of copper this year and a 1.8 per cent decline in China's copper consumption.

Base metals, including copper, were BHP's biggest earner in 2005-06, contributing $US5.4 billion to earnings before interest and tax.

Rio relies even more heavily on copper production, with the metal responsible for almost half of the company's earnings in the six months to June 30.