The newspaper cited traders with direct knowledge of the transactions as saying Codelco bought the metal on the spot market from unnamed miners and traders.

Chile's state-owned mining company was forced into buying copper as it was struggling to meet its annual contracts, due to unspecified problems at one of its smelters, according to the article published on the FT's website.

The emergency purchases by Codelco to meet its contracts were small, at about 3,000 to 5,000 tons a month, the FT said, compared with annual production of about 1.7 million tons.

The purchases are described as "unusual" by the FT as Codelco generally leaves itself plenty of leeway to cope with unexpected production problems when it signs annual contracts.

It has not run short of metal for several years, according to people familiar with the company, cited in the article.

Codelco, which accounts for one-third of global supply, has struggled to lift output despite record prices. Production in the 12 months to February is the lowest since 2004, the FT said.

(Reporting by Stephen Mangan; Editing by Maureen Bavdek)

• A Permanent Economic Emergency