Unionized workers at Chile’s Escondida copper mine, the world’s largest, are discussing the final wage offer presented Wednesday by majority owner and operator BHP (ASX, NYSE:BHP) (LON:BLT), which looks shy of what employees wanted.
The company has offer workers a signing on bonus of $27,000, up from an earlier offer of $23,000, plus a 1.5% salary increase, but still well under the bonus up to $43,000 and 5% increase demanded by Escondida unionized staff, local paper La Tercera reported (in Spanish).
The union, representing about 2,500 mineworkers, has five days to approve or discard the deal. A rejection would trigger five days of government mandated mediation, which can be extended by another five days.
BHP is hoping to avoid a repeat of last year’s damaging 43-day strike, which rattled the global copper market and translated into roughly $1 billion lost revenue for the company.
Escondida — responsible for about 5% of the world’s total copper output — failed to produce more than 120,000 tonnes of the red metal due to last year’s strike, which became the longest private-sector mining strike in Chile’s history.
While majority-owned and operated by BHP, Rio Tinto and Japanese companies such as Mitsubishi Corp also hold stakes in Escondida mine.
Chile is the world’s biggest copper producer, and sales of the metal make up for about 60% its export earnings.
In the next six months, copper forecasters will keep a close eye on the Chilean mining sector as prepares for another busy round of labour talks.
From the 32 contracts set to expire in 2018 at the country’s mines, there are still a dozen to be negotiated before year-end.
The nation’s labour laws have changed recently – in April 2017 – and the ramifications are not fully understood. What is clear is that unions are empowered and this has influenced negotiations. They are better prepared from a legal and economic point of view.
While copper prices dropped recently to a 1-year-low and are hovering around $2.80 per pound, they are still higher than during the previous negotiations, which puts more pressure on companies to reach an early solution.