Global copper supply could be disrupted if Chile miners strike
Global copper supply may be disrupted if wage talks at three Chilean miners fail to reach agreement and simultaneous strikes occur
02 August 2021 - 11:37
byJames Attwood
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The cathode manufacturing process is pictured inside a plant at a copper smelter in Chile. Picture: REUTERS/RODRIGO GARRIDO
A tightening global copper market is facing the real possibility of simultaneous strike disruptions at three mines in Chile, the top producer.
By far the most serious threat to global supplies comes from Escondida, the biggest copper mine in the world, where workers rejected owner BHP Group’s final wage offer in voting last week. Unless the two sides can reach a deal in government-mediated talks this week, the market may be left without production from a project that last year churned out 1.2-million metric tons.
Two other smaller mines — Codelco’s Andina and JX Nippon Mining & Metals’ Caserones — are in the same situation as a country that accounts for more than a quarter of global copper navigates a slew of collective bargaining at a particularly sensitive time in the metals cycle and in Chilean politics.
The labour tensions are intensifying just as trillions of dollars in government stimulus fuels demand for industrial metals. Copper futures have gained over the past two weeks after retreating from an all-time high in May. On Monday, prices advanced as much as 0.7% to $9,800 a ton on the London Metal Exchange, and traded at $9,760 at 7.46am in London.
The windfall enjoyed by producers is emboldening mineworkers, with host nations also looking at ratcheting up taxes to help resolve inequalities exacerbated by the pandemic. In Chile, that’s all playing out as the nation drafts a new constitution that may lead to tougher rules on water, glaciers, mineral and community rights, with presidential elections in November.
At the same time, companies are striving to keep labour costs in check in a cyclical business and as ore quality deteriorates and input prices start to rise.
In last week’s vote, members rejected BHP’s wage proposal by an overwhelming 99.5%. Union leaders say the company is dangling large one-time bonuses in exchange for longer hours and new demands in a bid to boost productivity and profit. BHP said its proposal included better conditions and new benefits and that it remains open to dialogue.
“We hope that this strong vote will be the decisive wake-up call for BHP to initiate substantive discussions to reach satisfactory agreements, if it wants to avoid a lengthy conflict that could be the costliest in the country’s union history,” the union said.
Bloomberg News. More stories like this are available on bloomberg.com
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Global copper supply could be disrupted if Chile miners strike
Global copper supply may be disrupted if wage talks at three Chilean miners fail to reach agreement and simultaneous strikes occur
A tightening global copper market is facing the real possibility of simultaneous strike disruptions at three mines in Chile, the top producer.
By far the most serious threat to global supplies comes from Escondida, the biggest copper mine in the world, where workers rejected owner BHP Group’s final wage offer in voting last week. Unless the two sides can reach a deal in government-mediated talks this week, the market may be left without production from a project that last year churned out 1.2-million metric tons.
Two other smaller mines — Codelco’s Andina and JX Nippon Mining & Metals’ Caserones — are in the same situation as a country that accounts for more than a quarter of global copper navigates a slew of collective bargaining at a particularly sensitive time in the metals cycle and in Chilean politics.
The labour tensions are intensifying just as trillions of dollars in government stimulus fuels demand for industrial metals. Copper futures have gained over the past two weeks after retreating from an all-time high in May. On Monday, prices advanced as much as 0.7% to $9,800 a ton on the London Metal Exchange, and traded at $9,760 at 7.46am in London.
The windfall enjoyed by producers is emboldening mineworkers, with host nations also looking at ratcheting up taxes to help resolve inequalities exacerbated by the pandemic. In Chile, that’s all playing out as the nation drafts a new constitution that may lead to tougher rules on water, glaciers, mineral and community rights, with presidential elections in November.
At the same time, companies are striving to keep labour costs in check in a cyclical business and as ore quality deteriorates and input prices start to rise.
In last week’s vote, members rejected BHP’s wage proposal by an overwhelming 99.5%. Union leaders say the company is dangling large one-time bonuses in exchange for longer hours and new demands in a bid to boost productivity and profit. BHP said its proposal included better conditions and new benefits and that it remains open to dialogue.
“We hope that this strong vote will be the decisive wake-up call for BHP to initiate substantive discussions to reach satisfactory agreements, if it wants to avoid a lengthy conflict that could be the costliest in the country’s union history,” the union said.
Bloomberg News. More stories like this are available on bloomberg.com
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