"May 16 (Bloomberg) -- Codelco, the world's biggest copper producer, said prices of the metal may extend record gains this year because of possible supply disruptions, low inventories and purchases by investment funds."

"Mining companies failed to anticipate a jump in demand from China, the world's biggest user of the metal, as well as the surge in prices, leading to a lack of new mining projects to help boost supplies, Souper said. Prices, which have surged 84 percent this year in New York, also increase the chance of labor strikes that disrupt production. (Codelco's vice president of sales, Roberto Souper).

Codelco, which in February forecast prices of as much as $1.70 (we are way past that) a pound this year, plans to increase its estimate to take into account the effect of investment funds, Souper said.

Larrain Vial SA, a Santiago-based brokerage advising mining companies about selling shares on the Santiago Stock Exchange, said it expects prices to gain to $5 a pound this year

"There's a number of mines that are having supply restrictions,'' Larrain said. "There's a lag that takes anywhere from five to ten years to increase supply in a massive way.''