BHP’s Escondida mine strike becomes Chile’s longest, ends with no deal

Escondida’s 2,500-member main union has been on strike since Feb. 9 after new contract talks fell apart, and the mine — the world’s largest — has produced no copper since then. (Image courtesy of BHP Billiton)

Talks between striking workers at Escondida copper mine in Chile and majority owner and operator BHP Billiton (ASX, NYSE:BHP) (LON:BLT), ended Thursday with the parts failing to reach a deal and the main union choosing to return to work.

The labour action at the world’s largest copper mine, which finished today after 43 days, became the longest private-sector mining strike in Chile’s history, local paper El Mercurio reports (in Spanish).

Shortly after the mine’s president declared talks officially over, strikers decided to return to work.

It was still far from matching the 74-day strike at Codelco’s El Teniente mine in 1973, which took place shortly before the military coup that overthrew socialist President Salvador Allende.

Marcelo Castillo, the mine’s president, declared talks officially over and said the company was now focused on choosing the best alternative to restart production.

Workers give up, extend contract

In response, the main union at Escondida said its 2,500 members would return to work but not before invoking a rarely used legal provision, known as Article 369, which allows them to extend their old contract for 18 months. At the end of that period, both sides would again need to try to reach a new agreement.

The use of such legal aid would be “complex” for Escondida, Castillo had said earlier in the day, as it would require to review the operation’s plan and structure in order to allow the firm to make its mining business viable.

In the past weeks, the company had already warned the long-dragged stoppage would force it to revise its operational plan, leading to a downward adjustment of its planned production volumes for the year, given that BHP, which owns de 57,5% of the mine, has already reported more than $712 million in losses.

Talking to earlier this month, Chile’s Mining Minister Aurora Williams also expressed concerns about the losses caused by the strike. “We estimate that some 3,400 tonnes of copper are not being produced each day of the strike. This translates into 100,000 tonnes per month,” she said.

It’s estimated that Escondida — responsible for about 5% of the world’s total copper output — failed to produced more than 120,000 tonnes of the red metal due to the stoppage.

While majority-owned and operated by BHP, Rio Tinto and Japanese companies such as Mitsubishi Corp also hold stakes in the mine.

Chile is the world’s biggest copper producer, and sales of the metal make up for about 60% its export earnings.