MAC: Mines and Communities

Two-week strike ends at Escondida in Chile

Published by MAC on 2011-08-08
Source: Marketwatch, Reuters, AFP

Bonus agreement finally struck

A strike at Escondida,  the world's biggest copper mine, started on July 21. It sparked stoppage threats at other mines across Chile, the globe's top copper producer. (Workers at Collahuasi, the world's third most productive copper mine, also went on a 24 hour strike this week).

Escondida posted net profits of US$1.031bn in the first quarter of 2011, reaping benefits for BHP Billiton (which owns 57.5% of the mine), for Rio Tinto (with 30%) and two Joint Venturers, led by Mitsubishi.


Strike ends at world's biggest copper mine

Escondida mine workers protest in 2006. Miners voted Friday to end a two-week long strike at the world's largest copper mine, La Escondida in northern Chile, approving an agreement struck by their union and management.


5 August 2011

Miners voted Friday to end a two-week long strike at the world's largest copper mine, La Escondida in northern Chile, approving an agreement struck by their union and management.

AFP - Miners voted Friday to end a two-week long strike at the world's largest copper mine, La Escondida in northern Chile, approving an agreement struck by their union and management.

Escondida employees accepted a management offer of a special production bonus for 2010, a year in which the mine had record earnings, a spokesman for the mine's largest union said.

"The strike is going to be lifted," said union spokesman Marcelo Tapia.

He said workers were expected to be back on the job on Friday once union and management representatives signed a formal agreement.

The company, controlled by Anglo-Australian mining giant BHP Billiton, issued a statement saying "operations have gradually resumed, after workers ended the illegal paralysis of operations."

The strikers accepted a 2.6 million peso (about $5,800) bonus, about half what they were initially demanding.

Escondida reported 4.3 billion dollars in earnings in 2010, a 35 percent increase over the previous year.

The mine produces about seven percent of the world supply of copper. Chile accounts for a third of the world's production of the metal, which has soared in price along with other commodities.

Miners striking Escondida mine may vote on bonuses

By Anthony Esposito


4 August 2011

SANTIAGO - Striking unionized workers at the Escondida mine in northern Chile are reviewing management's bonus offer and mulling whether to accept it and put an end to the 14-day work stoppage, a union leader said Thursday.

Workers of the 2,375-strong union downed their tools on July 21 to protest what they deemed to be unmet contract terms, forcing Escondida, which accounts for 7% of annual global copper output, to lose an estimated 3,000 metric tons of the red metal a day.

Last Wednesday, the company declared a force majeure--a contract term that allows a company to temporarily halt its commitments due to an event beyond its control--on its copper-concentrate shipments because of the strike.

"The union is reviewing the company's latest offer. We haven't decided yet if we're going to put it to a vote," union director Luis Valdes said, without specifying the new offer's terms.

According to an internal Escondida document, the offer is the same one management made last week, which totals a gross 2.6 million pesos ($5,640). The sole union at the mine has been seeking a CLP4 million bonus because of sky-high international copper prices.

The union will hold a general assembly later Thursday to inform workers of the offer and possibly put it to a vote, the union's website said.

Copper-market participants in Chile are paying close attention to the Escondida strike to see if it will set a precedent regarding negotiations.

Chile is the world's largest copper producer, accounting for one-third of global supply.

The company, in its internal statement, said it is "its duty to take the necessary measures to resume operations and guarantee the right to work." This could include firing strikers.

According to Chilean labor laws, mine strikes are legal only when regulated contract negotiations fall through.

A regional government labor office recently ruled the strike illegal because there is no ongoing regulated collective-bargaining process.

Global diversified miner BHP Billiton Ltd. has a controlling 57.5% stake in Escondida and operates the mine, while Rio Tinto plc holds another 30%. The remaining 12.5% is held by a Japanese consortium led by Mitsubishi Corp.

Escondida produced 1.09 million tons of copper in 2010.

Escondida strike declared illegal, union files appeal - Chile

By Victor Henriquez

Business News Americas

1 August 2011

Northern Chile's region II labor office has declared the ongoing strike at the Escondida copper mine illegal, the secretary of the workers union number 1, Marcelo Tapia, told BNamericas.

"We have filed an appeal to the ruling. We believe the labor office should have abstained from issuing this ruling since it took part in an effort to set up mediated talks with the company, granting validity to the negotiations," Tapia said.

The strike at Escondida, the world's biggest copper mine, started on July 21. Each day of the stoppage represents lost output of around 3,000t and US$30mn in losses, according to union estimates.

Under Chilean law, strikes are only legal when they are part of collective labor contract negotiations, and companies have the right to fire any employee not attending work for two straight days without any justification.

As a result, management at Escondida - which is 57.5%-owned by BHP Billiton - could lay off workers although this has not happened yet. "We are still evaluating our options," the external affairs VP of BHP's base metals division, María Olivia Recart, said last week.

"We have also filed a legal action aimed at protecting our workers from potential layoffs, arguing the company is not able to give evidence of workers failing to show up since there is no clocking in and out system at the mine," Tapia said.

Late last week, the union rejected an offer from the company to put an end to the strike, as it included a lower fiscal year bonus than what was originally proposed. Despite reaching agreements over several of the workers' demands, the company offered a 2.6mn-peso bonus (US$5,691), lower than the original offer of 2.8mn pesos and well below the 5mn pesos workers are demanding.

The company declared force majeure on copper concentrates sales on July 27 due to the complete halt of operations.

Output at the mine fell 9.3% to 377,400t in the first five months of this year compared to the same period in 2010, according to figures from state copper commission Cochilco. The decrease is mainly related to lower grades at the operation and bad weather conditions.

Escondida posted net profits of US$1.031bn in Q1, up from US$1.026bn year-on-year. The improvement was driven by a 7.4% increase in revenues from US$2.00bn to US$2.15bn, mainly due to higher copper prices in the period. BHP has not yet reported official financial results for the 2011 fiscal year.

Rio Tinto owns 30% of Escondida, while two JVs led by Mitsubishi hold the remainder.

Chile mine chaos deepens as Collahuasi joins Escondida

by Moises Avila


30 July 2011

ANTOFAGASTA, Chile, (Reuters) - Workers at the world's No. 3 copper mine, Chile's Collahuasi, put down their tools over unmet labor demands on Saturday, compounding worker
unrest as a strike at top global copper mine Escondida entered a ninth day.

Workers at Collahuasi voted to strike for 24 hours, but may extend the stoppage if the mine operator fails to address their demands, union leader Jacqueline Cerda told Reuters.

Repeated labor action in top copper producer Chile has fueled supply worries and spurred global copper prices. Escondida, majority owned by BHP Billiton, extracts 7 percent of the world's copper, while Collahuasi accounts for 3.3 percent.

While markets fear a contagion, the strike at Collahuasi, owned jointly by Xstrata and Anglo American, appeared to be an isolated example -- unions at other mines said they have no plans for immediate stoppages.

Collahuasi mine operator said it continued to operate with workers who did not join the action.

"The company's union pushed for this illegal mine stoppage of 24 hours, which was abided by a group of workers," the operator said in a statement.

A union leader said operations were down and that most workers are angry over the way their production bonuses are calculated and believe they should be larger.

"Just like in Escondida our union workers are very distrustful and are asking their leaders for more action to address their demands," the Collahuasi union said in its online
publication Atipana.

Collahuasi and Escondida produce nearly a third of all the mined copper in Chile, or about 4,400 tonnes a day.

Escondida workers on Friday rejected a new compensation offer from BHP, but acknowledged they were close to a deal and were deadlocked over a bonus demand.

Copper Prices

Labor negotiations in Chile have turned more volatile in recent years as worker demands have increased with copper prices near record highs.

Collahuasi workers staged a 32-day strike six months ago over a new wage contract -- the longest labor stoppage ever at a major private mine in Chile.

A series of labor protests, accidents and bad weather has curbed the mine's output.

Higher copper prices have emboldened workers from Indonesia to Zambia and Chile to demand a bigger slice of the record earnings of global giants like BHP, Freeport McMoran and Anglo American.

Copper prices in London jumped early on Friday to three-month highs on supply fears stemming from Escondida. But copper gave back most of those gains later on concern about the U.S. economy and a potential default as Washington faces an Aug. 2 deadline to raise its debt ceiling.

The Escondida strike took Chile by surprise, coming outside the collective wage agreement process, and is seen raising the possibility of more unpredictable labor action.

A mining union federation representing 11,000 workers at private mines in Chile threatened on Saturday a wave of protests if any worker at Collahuasi or Escondida is fired.

the strikes come on the heels of a 24-hour workers stoppage by state copper giant Codelco, where unions demand a bigger say in the restructuring of the world's top copper mining company.

Escondida has declared force majeure -- a clause that frees it of liability for shipment delays -- on most of its output this week. It said the length of the force majeure hinged on the strike.

Some in the copper industry fear that if BHP agrees to demands for a higher bonus, workers at other mines in Chile could make similar demands.

(Additional reporting by Alonso Soto; writing by Simon Gardner; editing by Mohammad Zargham)

Strike at Chile's Collahuasi copper mine


30 July 2011

SANTIAGO - Unionized Chilean workers at Collahuasi, the world's third most productive copper mine, went on a 24-hour strike Saturday seeking better benefits and an end to alleged anti-union measures by management.

The action follows an ongoing strike that began on July 22 at the world's biggest copper mine, Minera Escondida, in northern Chile.

"The strike is for 24 hours. We are upset with the company's anti-union measures, the failure to recognize the collective contract and pressure being placed on the workers," Collahuasi union leader Cristian Arancibia told AFP.

Some 1,500 Collahuasi employees stopped work at 8:00 am (1200 GMT) Saturday, and are set to resume at the same time Sunday.

Arancibia said that management at the mine -- owned jointly by Switzerland-based Xstrata and the Anglo-South African company Anglo American -- is directly negotiating with workers outside of the union contract, "and we are not going to allow that."

The mining company called the strike illegal, and said the mine "has continued to operate with workers who did not strike."

Collahuasi produces nearly three percent of the world's copper output. Some 535,000 tons of copper were mined at the site in 2009, according to government figures.

In December 2010 workers at Collahuasi went on strike for 33 days seeking higher pay. Weeks later, following an accident at the port the mine uses, activity at the mine ceased until April.

Separately, some 2,300 workers at the Escondida mine -- in which Anglo-Australian mining giant BHP Billiton has a controlling stake -- downed tools last week over unresolved contract disputes.

Chile is the world's largest copper producer, with 5.6 million tons annually. More than a million tons a year -- or 6.8 percent of the world production -- are produced at the Escondida mine.

On July 11 workers at mines owned by Chile's state copper giant Codelco walked off the job for 24 hours to protest measures that they said were steps toward privatization.

Codelco's first strike in 18 years halted work at Chuquicamata -- the world's largest open-pit mine -- El Teniente and Andina. The state-owned operations produce more than 10 percent of the world's copper.

As strike escalates giant Escondida copper mine declares force majeure

By Moises Avila and Alonso Soto


28 July 2011

ANTOFAGASTA/SANTIAGO - The world's biggest copper mine, Chile's Escondida, halted concentrate sales on Wednesday as a six-day strike showed no sign of ebbing, stoking fears about global supplies of the metal.

The surprise stoppage at Escondida was the latest in a wave of protests at mines from Asia to Africa as workers demand more from a bonanza in copper prices.

The mine operator said in a statement it declared force majeure -- a clause that frees it of liability on delays in shipments -- on most of its output. It said the length of the force majeure hinged on the strike.

The strike has sparked stoppage threats across mines in Chile, the world's top copper producer, but contagion fears eased on Wednesday after President Sebastian Pinera met with union members at state giant Codelco.

Escondida unions threatened to take over the deposit if owner BHP Billiton uses strikebreakers to resume operations at a mine that extracts about 7 percent of the world's copper.

"If the company tries to do that, the strike will turn into a takeover," said union leader Roberto Arriagada after filing a suit against the company for alleged illegal labor practices.

Chances of a prolonged stoppage grew as BHP has also dug in, dismissing any talks while workers continue with a strike it deems illegal and threatening to fire them.

The force majeure applies to sales of copper concentrate, the crushed, unrefined mineral. Concentrate represents about 72 percent of Escondida's annual output. The mine did not say what was the status of its copper cathode sales.

Workers have demanded an $11,000 bonus linked to company earnings to compensate for a fall in production level compensation. The bonus is discretionary and not part of the collective agreement.

Despite the strike, copper prices actually fell on Wednesday as investors remained fearful of the health of the global economy after weak U.S. economic data. Copper prices in London fell 0.44 percent to $9,777 a tonne.

The last time Escondida workers downed tools in 2006, the strike had more influence on copper prices as the global economy was growing strongly and China was stepping up copper purchases.

The latest strike also comes just days after a walkout by workers at Codelco -- the first in nearly 20 years -- and six months following a month-long strike at Collahuasi, the world's No. 3 copper mine.

Collahuasi union workers have threatened stoppages of their own for benefits. They have agreed to continue talks with the operator of the mine, jointly owned by Xstrata and Anglo American, but have warned they could strike.

Tensions appeared to ease at Chile's Codelco, the world's No. 1 copper producer, after Pinera met with union leaders and reaffirmed his government would not privatize the state enterprise as workers fear.

"We are more at ease now," Julio Jalil, one of the leaders of Codelco's labor federation, told Reuters after the meeting. "But this is not over yet, he has to deliver on the promises he made to us."

Codelco unions are fighting to regain their influence in the company after CEO Diego Hernandez, former head of BHP base metals unit, started a deep restructuring of the state giant to better compete with leaner private rivals.

Earlier this week, Codelco also defused an immediate stoppage threat after agreeing to hold talks with thousands of contract workers demanding more benefits.

Any prolonged strike at Escondida could draw in workers from other private mines in a solidarity stoppage.

The Escondida strike marks a rare precedent among private mines in Chile where strict labor laws allow employers to fire workers who strike outside collective contract negotiations.

Escondida settled a 44-month contract with workers in 2009, so the latest stoppage is a signal unions have a shorter fuse and have been encouraged by a raft of protests by miners, environmentalists and students against the government of increasingly unpopular Pinera.

(With reporting by Fabian Cambero and Antonio de la Jara.Writing by Alonso Soto and Alexandra Ulmer; Editing by Simon Gardner and David Gregorio)

Chile Escondida strike drags on as mediation bid fails

By Moises Avila


26 July 2011

ANTOFAGASTA, Chile - A five-day strike at Chile's giant Escondida mine looked set to drag on after the world's top copper deposit on Tuesday snubbed a state mediation bid, amid fears labor unrest could spread in the sector.

Escondida, majority owned by BHP Billiton, dug in on Tuesday, refusing a labor authority invitation in the northern city of Antofagasta for talks with strikers and taking a hard line that could prolong the disruption.

The stoppage struck out of the blue last week, the latest in a wave of labor unrest to spread at mines in Chile and afar afield as Indonesia as workers demand a a bigger share in a copper price bonanza.

It also comes just days after a walkout by workers at state giant Codelco -- the first in nearly 20 years -- and six months following a month-long strike at the world's No.3 copper mine, Chile's Collahuasi.

Raising the specter of contagion, a Collahuasi union leader said workers would hold an urgent assembly later on Tuesday and could strike if the mine ignores their own bonus demands.

Escondida, which produces nearly 7 percent of the world's mined copper, said it would not talk to workers as long as they continued their strike to demand bonuses linked to company earnings to offset a fall in production after years of consecutive annual output drops on lower ore grades.

However, the union extended an olive branch on Tuesday, asking the labor authority for fresh talks.

"The company did not attend the meeting today, but the union has asked for a second meeting on Thursday to resume dialogue as a way to solve the conflict," said Marcelo Pizarro, head of the Antofagasta labor authority.

Escondida could stand to lose production of about 3,000 tonnes per day during the strike, which on Tuesday boosted copper prices CMCU3 to their highest level in a week and on course to record highs.

"We cannot talk with the union while they are not working," said Maria Olivia Recart, an external affairs official at BHP Billiton Base Metals unit in Santiago. "We cannot validate a mediation process when there is no collective wage negotiation ongoing and the strike is illegal."

If BHP bows to the union demands it could embolden workers at other mines to use similar aggressive tactics.

Rare Precedent

The Escondida strike comes on the heels of a 24-hour stoppage by workers at state copper giant Codelco, which experts say has encouraged private-sector miners to increase pay demands as prices of the metal hover near record highs. Codelco union have threatened more unrest if their demands for more influence in a restructuring are not met.

The Escondida strike marks a rare precedent among private mines in Chile where strict labor laws allow employers to fire workers who strike outside collective contract negotiations.

Escondida settled a 44-month contract with workers in 2009, so the latest stoppage is a signal unions have an increasingly short fuse and have been encouraged by a raft of protests by miners, environmentalists and students against the government of increasingly unpopular President Sebastian Pinera.

"This strike at Escondida is kind of a new way in which Chilean strikers are conducting themselves. Typically, they do it ahead of their contract negotiations ... they don't just drop shovel," said Justin Lennon, an analyst at Mitsui Bussan Commodities in New York.

Around 9,000 subcontract workers were due to join the protest on Tuesday.

Union leaders say Escondida is near declaring force majeure -- a contract clause that frees it of liability on shipment delays -- on copper sales. BHP will advise clients first.

BHP said its main port of Coloso was operating, despite witness accounts that it was deserted on Monday.

(With reporting by Alonso Soto and Fabian Cambero in SANTIAGO and Chris Kelly in New York. Writing by Simon Gardner and Alexandra Ulmer)

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