Codelco warns strike at Salvador mine risks division’s future

Chile’s Codelco, the world's No.1 copper producer, said a strike over contract terms initiated Monday by members of Union No. 2 of its Salvador mine, threatens the division’s feasibility.

Salvador, which is the state-owned firm’s smallest operation and produced 49,000 tonnes of copper last year, has been battling to turn a profit after dwindling ore grades pushed up production costs, affecting a plan to extend the mine's life.

Salvador, Codelco’s smallest operation, has been battling to turn a profit after dwindling ore grades pushed up production costs, affecting a plan to extend the mine's life.

“As is public knowledge, the general situation at Salvador is critical,” Codelco said in the statement (in Spanish). “To impede work at the Salvador division — at a time when we need to guarantee its continuity, increase production and intensify efficiency efforts — prevents us from ensuring its viability.”

The stoppage was illegal until late Monday, when one of the unions accepted Codelco’s final contract offer. After that, it became legal, which means most workers have now downed tools. This partly as those who did not take part in the initial strife were unable to get to work after striking colleagues blocked access to the mine.

Operations at the mine, located in northern Chile, remained shut at about 9 a.m. local time Tuesday, local radio station Cooperativa.cl reported (in Spanish).

With copper prices down more than 30% since early 2014, Codelco offered last week a wage increase limited to inflation, as well as signing and efficiency-related bonuses. But members of Union No. 2, which covers Salvador's refinery and smelting workers, voted 346 to 228 against it.

In August last year, the mine was hit by an around three-week strike by a different group of contract workers, which cost Codelco more than $15 million in lost production and damaged equipment.