Workers at the world’s largest copper mine in Chile are striking after pay talks with Australian resources giant BHP fell apart, casting a shadow of uncertainty on Wednesday over the market for the commodity.
The Escondida mine in Northern Chile yearly digs up around five per cent of the world’s copper, a coveted metal used in everything from electrical wiring to rechargeable batteries.
A global glut in copper stockpiles should blunt the immediate impact of the strike, analysts said, although there are fears it could start to bite if production is slowed for more than a week or two.
Australian-based BHP, which owns a majority stake in the vast open-air mine, said scaled-back operations would continue as non-union staff put contingency plans into action.
Production ground to a halt at the Escondida mine when workers downed tools for 44 days in 2017, costing BHP $740 million and wiping 1.3 per cent off Chile’s annual economic output.
Encouraged by surging global prices earlier this year, union representatives have sought a bigger slice of profits for the 2,400 workers they reportedly represent at Escondida.
The union said it launched a ‘legal strike’ over unmet demands that included bigger bonuses, shorter work days, and compensation tied to total years worked at the mine.
Media reports in Chile said BHP had offered a one-off bonus of nearly $29,000, lower than the $36,000 demanded.
The buoyant copper prices seen in May this year have sagged in recent months, with significant stockpiles of refined metal building in the depots of China and elsewhere.
“Total stocks at warehouses monitored by the exchanges in London and Shanghai have risen to levels not seen since the depth of the pandemic back in early 2020,” said Saxo Markets commodity analyst Ole Hansen in a recent research note.
“Instead, we have seen inventories monitored by the major futures exchanges continuing to rise at a rapid pace, signaling a period of a major supply/demand mismatch, primarily due to weak demand.”
Nicknamed the “Big Australian”, BHP has been increasingly eager to snap up new sources of copper.
It was one of the driving factors behind the company’s ultimately failed bid to take over rival Anglo American earlier this year.
Meanwhile, mining giant BHP has said it had started removing workers on strike at its Escondida copper mine in Chile, deepening tensions at the site after a powerful union rejected the company’s latest invitation for talks on pay.
The strike at the world’s largest copper mine was declared hours earlier after negotiations collapsed and could lead to a major hit to production.
“After a new invitation from the company to reach an agreement, Union No. 1 declined to restart talks,” BHP said in a statement, referring to the labor group that represents about 2,400 people.
Workers walked out as they demanded a bigger slice of copper profits, which have been buoyed by recent high prices.
The union maintains it is willing to return to negotiations, and accused BHP of violating strike terms by replacing workers who walked out, who it said were essential to basic operations.
“We demand the company immediately end this grave anti-union practice,” the union said in a statement.
The strike, after the union encouraged members to reject BHP’s offer, has stirred up memories of the last major Escondida walkout in 2017, which hit BHP’s copper production and pushed up global prices of the metal, which is used to make wiring and nearly every single electronic device.
BHP offered a $28,900 bonus per worker, compared with the union’s demand of 1% of shareholder dividends for the mine, which would amount to roughly $36,000.
“We made every responsible effort to reach an agreement, but that wasn’t possible,” the union said in a statement ahead of the strike which started at 8 a.m.
Channels TV/Reuters
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