BHP's productivity gains are cheered by investors — and unions
(Bloomberg) — BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie touted $200 million in productivity gains at its giant Escondida copper mine in Chile, the world’s largest. While that’s music to the ears of investors pushing for the industry to extract more profit from operations, it may also be welcomed by Escondida workers as ammunition for their upcoming wage talks.
Escondida’s Union Number 1, representing about 2,500 operators and maintenance workers, led a 44-day strike last year that ended with no accord. The negotiation is expected to resume in June or July this year, with workers emboldened by higher copper prices and new labor laws in Chile preventing companies from cutting benefits.
“The economic scenario has changed enormously,” union spokesman Carlos Allendes said by phone earlier this month. “The company will have to make an effort and open up a dialog; we don’t rule anything out if they keep the same position.”
Speaking in Florida on Monday at a mining conference hosted by BMO Capital Markets, Mackenzie said one-off events including planned smelter maintenance at its Olympic Dam mine in Australia limited productivity gains for the half year to February. That was partly offset by increased efficiency at Escondida and the ramp-up of a plant that allowed the mine to process a record amount of material.
BHP has said it expects to deliver $2 billion of net productivity gains by the end of the 2019 financial year.
Chile is going through its busiest-ever year for wage talks, with mines at the top copper-producing country negotiating contracts with 32 unions. These sites represent about three-quarters of the country’s copper output, or about one-fifth of world production. With supply constrained after years of cutbacks spurred by low prices, any disruptions resulting from strikes could quickly tighten up the market, according to analysts at Bank of America Corp. and Barclays Plc.
(Written by Laura Millan Lombrana)