Copper output disrupted at strike-hit Capstone Chile mine

Production at a Capstone Copper Corp. mine in northern Chile has halted amid a nearly three-week labor strike, further tightening the global market. The company’s shares fell.

The company said in a Thursday statement that individuals entered desalination plant facilities 40 kilometers (25 miles) from its Mantoverde mine on Jan. 18 and interference with its electrical system interrupted the water supply to the open-pit copper and gold operation.

“Striking union members are preventing access and the restart of facility operations at the desalination plant,” Capstone said, adding that it’s seeking judicial support to regain access to the plant and resume operations.

Sulphide operations are temporarily halted while oxide operations are expected to continue until Friday, at which point they will be temporarily halted unless water supply is restored, the company said. Union boss Eduardo Claveria said earlier Thursday that the mining site was running on restricted water supply, affecting processing operations.

With no plans to resume wage talks, the standoff shows how copper’s record rally is straining labor relations. Workers are seeking a larger share of the windfall, while management tries to contain costs in a cyclical industry.

More than 600 union members at the mine in Chile’s Atacama region downed tools on Jan. 2 after failing to reach a deal in collective bargaining.

Last week, the Vancouver-based metals producer said Mantoverde was operating at about 75% of normal capacity, more than it previously indicated. The mine, which has been expanding capacity, was budgeted to reach an annual production rate of 106,000 tons this year.

Capstone owns 70% of the asset, with a unit of Mitsubishi Group holding 30%. Striking workers account for 22% of the total workforce, including contractors, or roughly half of employees.

Shares of Capstone fell 3.8% as of 4 p.m. in Toronto, the steepest decline in more than two months.

(By James Attwood)