Workers at World's Biggest Copper Mine Prepare for Strike -- Update
February 08 2017 - 1:19AM
Dow Jones News
By Rhiannon Hoyle and Ryan Dube
Workers at the world's largest copper-mining operation are
expected to strike on Thursday, driving up copper prices on fears
of a shortage of the metal and expectations it could trigger
stoppages at other mines.
A strike at the BHP Billiton Ltd.-controlled Escondida mine in
Chile would follow unsuccessful talks on worker compensation
between union officials and management, most recently mediated by
the Chilean government. It would halt production from the mine in
the Atacama Desert in northern Chile that accounts for roughly 5%
of global output of copper.
It could also set a precedent for other copper mines facing wage
negotiations this year, particularly in Chile, but also in the
U.S., analysts say.
A week ago, union workers at Escondida voted to strike, having
rejected an offer from operator Minera Escondida that workers say
would cut into their benefits. The company requested that
authorities intervene to mediate negotiations, but on Tuesday union
officials said they were no closer to a deal.
The union accused the company of being rigid in negotiations
over wages and benefits for workers at the mine. An agreement with
Escondida's largest union, Union No. 1, expired at the end of
January.
Global miners have been focused on cutting costs and improving
productivity, triggered by what became a multiyear downturn in
commodities, despite a recent rebound.
Analysts have predicted a rise in compensation disputes this
year, as higher prices spur workers to push for better pay when
their contracts expire.
"Despite the sector's recovery, however, the industry is still
obsessively focused on unit cost reductions," Jefferies said in a
Feb. 6 note. "Mining companies do not want to lock in fixed cost
increases."
BHP manages the operation and holds a roughly 58% stake. Other
investors include Rio Tinto PLC and Japan's Mitsubishi Corp.
"The position the company has taken doesn't allow us to see a
solution to the conflict," Union No. 1 said. "The union and its
more than 2,500 workers will continue with its contingency plan to
start the strike on Thursday."
Expectations of a strike have helped drive the price of copper,
used in many products including computers and cars, to a roughly
20-month high. A stoppage at Escondida will cut about 25,000 tons a
week from the global copper market, Jefferies said.
On Wednesday, the price of copper on the London Metal Exchange
was trading up 1.4% at $5,875 a ton.
It isn't the first strike at the copper operation, which ships
more than a million tons of copper a year after processing ore dug
up from two large pits. In 2011, workers went on strike for two
weeks. There was also a 25-day stoppage in 2006.
The mine will stop producing copper if the strike goes ahead,
Minera Escondida said, citing safety reasons. It said the local
labor regulator hasdesignated 80 workers to carry out work such as
maintenance.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and Ryan Dube
at ryan.dube@dowjones.com
(END) Dow Jones Newswires
February 08, 2017 01:04 ET (06:04 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
BHP (NYSE:BBL)
Historical Stock Chart
From Mar 2024 to Apr 2024
BHP (NYSE:BBL)
Historical Stock Chart
From Apr 2023 to Apr 2024