Talks between BHP, Escondida workers to resume as Gov’t steps in

Negotiations between BHP Billiton (ASX:BHP) and unionized Chilean workers at its Escondida mine, the world's biggest copper operation, are set to resume as soon as Monday, as the company has requested government mediation to avoid a looming strike.

About 2,500 workers at the mine this week rejected the last company wage offer and opted instead to down their tools. However, a union representative told Diario Financiero (in Spanish) that BHP had officially asked for government intervention, a move that extends talks and pushes back the start of a potential strike to Feb. 13.

Despite the upcoming mediation, workers say they are prepared to strike for as long as two months. If that happens, the union estimates BHP would fail to receive $20 million in lost income and a further $1 million in missing sales from Escondida.

The union say workers are prepared to strike for as long as two months. If that happens, it estimates BHP would fail to receive $20 million in lost income and a further $1 million in missing sales from Escondida.

Workers accuse BHP, the majority owner and operator of the vast copper mine, of offering no pay increase, seeking to cut bonuses, and removing top-up payments for those who take voluntary redundancy, as well as changing shift hours.

Escondida, located in the copper-rich Antofagasta region, in northern Chile, supports just over 10,000 full-time jobs and it is forecast to produce about 1.1 million tonnes of in the 12 months to June 30, according BHP figures. That is equivalent to about 5% of the world’s total copper production.

Prices for the red metal have been testing $6,000 a tonne this week, an almost 18-month high, on the possibility of such supply disruption. But the metal fell 0.9% on the London Metal Exchange Wednesday to $5,935.50 a tonne around noon, having earlier touched a two-month peak of $6,007.

Chile produces 28% of the world's copper and the country's output dropped by 3.9% in 2016, mainly due to lower production at Escondida and Anglo American Sur.

Production in the South American nation is expected to grow by 4.3% according to the Chilean government forecaster adding that Escondida would account for almost all of the expected increased output.

BHP, already the world's second-biggest listed copper miner, decided last year to raise its annual exploration spending by 29%, allocating nearly all its $900 million budget to finding new copper and oil deposits. The mining giant is committed to make of those two commodities the pillars of its future growth.