MAC: Mines and Communities

Chilean copper workers blocked from pension withdrawals

Published by MAC on 2021-05-01
Source: MINING.COM, Reuters, Port News

“Copper is the new oil”, Goldman said.

While copper is said to be heading to booming market conditions, mining workers in the largest producer of the metal are being blocked from their own money arguing that withdrawals would generate “a significant increase in the Chilean economy’s risk profile”.

See also:

2021-04-12 Chile's Codelco to pursue in Paris what it could not get in Ecuador

2011-07-18 Codelco workers on 24-hour strike against privatisation and dismissals in Chile

2009-08-25 Court Orders Codelco To Compensate Workers Suffering From Silicosis

Chile port, copper workers join protest against pensions move

Port News


Workers at major ports and copper mines in Chile are joining a nationwide protest over pensions policy this week that is set to end with a day-long stoppage on April 30.

Around 8,000 workers at 25 port terminals, including San Antonio, Valparaiso, and Antofagasta, are expected to join a weeklong protest, according to the Chilean Portworkers Union.

Union leaders are demanding that President Sebastian Pinera sign into legislation a policy approved by lawmakers last week allowing employees to withdraw up to 10% of their pensions savings to help compensate for the impact of the year-long COVID-19 pandemic.

Chileans have withdrawn more than $36 billion from their privately-run pensions funds since last August, leaving millions with no savings for their retirement.

Organizations representing mineworkers both at private mines and state-owned copper giant Codelco have said that they will consider joining the stoppages.

The world’s largest producer of copper, Chile produced 5.8 million mt of the metal last year.

So far only workers at Codelco’s flagship Chuquicamata division have confirmed that they will adhere to the stoppage.

Last year the mining complex produced 400,720 mt of copper.

Last week, President Pinera filed an injunction before the country’s Constitutional Court to block the bill, sparking the wave of protests.

On April 25, the president backtracked by announcing that the government would send its own legislation to Congress allowing the withdrawal but with a mechanism to replenish savings over the coming decade.

LME cash copper prices stood at $9,876/mt April, up 1.03% on day and near a 10-year high, amid concerns of supply-side tightness. Prices have been buoyed by growing demand from electrification projects, production curbs caused by the impact of COVID-19 at Latin American mine sites and the possibility of industrial action in Chile.

Chile mining unions threaten action over government bid to block pensions withdrawal

Fabian Cambero and Aislinn Laing


Apr 22, 2021

SANTIAGO – Mining unions in Chile have threatened to take protest action if the government does not drop a bid to block Chileans from drawing down more of their pensions savings early, piling pressure on President Sebastian Pinera’s administration.

The Federation of Copper Workers (FTC), which groups the unions of Codelco, the world’s largest copper producer, on Wednesday night told members to be ready to take unspecified action “in support of the just and necessary demands of the Chilean people” to combat economic hardship generated by the coronavirus pandemic.

Union umbrella organization the Mining Workers Coordinator (CTMIN) said it would withdraw from a working group set up with government to address pandemic-related issues, and mobilize its members to discuss action.

Other industrial unions have made similar threats, including port workers who have called for a general strike.

The government has long opposed the Congress-backed raids on the country’s privately-held pensions, the backbone of the free market system and base for its capital markets.

Chilean senators on Thursday are due to debate and vote on a plan to allow a third pandemic-era drawdown from pensions, which has already been approved by the chamber of deputies and is expected to receive cross-party backing.

Congress already approved two previous withdrawals of 10% from pension pots in July and December, with the help of members of Pinera’s Chile Vamos coalition who defied instructions to vote the initiatives down.

Proponents say it is necessary because the government’s emergency support is patchily distributed and insufficient.

The government argues that a fresh drawdown would increase the number of citizens without pensions from three to five million. It has repeatedly bolstered income replacement payments and loans to hard-hit families to try to head the bill off.

Chile’s central bank said this week that a third withdrawal risked generating “a significant increase in the Chilean economy’s risk profile.”

On Tuesday the government appealed to the country’s constitutional court to block the move, arguing it was unconstitutional since it implied a cost to the public purse that can only determined by the executive.

That could bear fruit, since the court ruled after the approval of the second withdrawal that the move had been unconstitutional.

However, if the government succeeds, it could spark the renewal of fierce social protests which ripped through Chile in October 2019 and simmer to this day.

On Tuesday and Wednesday night, after the government turned to the constitutional court, thousands of Chileans joined pot-banging protests that rang out around the country.

Copper price scales $9,000 after Goldman calls it the new oil

April 14, 2021

Copper resumed its rally on Wednesday, as analysts and executives expect increasing demand and likely low supply to drive prices even higher.

Copper for delivery in May was up 2.51% in afternoon trade, with futures at $4.1310 per pound ($9,088 a tonne) on the Comex market in New York.

The industrial bellwether metal is crucial in the global push for a greener economy, and right now, the market is facing a supply crunch.

US’s post-pandemic recovery and the Biden Administration’s infrastructure plan are helping to build momentum for base metals.

Goldman Sachs sees prices average $11,000 per tonne over the next 12 months, according to the Business Insider. By 2025, the metal could be priced at $15,000 a tonne, a rise of 66%, Goldman said in a report titled “Copper is the new oil”.

“Discussions of peak oil demand overlook the fact that without a surge in the use of copper and other key metals, the substitution of renewables for oil will not happen,’ the bank said.

Demand will therefore significantly increase, by up to 900% to 8.7 million tonnes by 2030, the bank estimates. Should this process be slower, demand will still surge to 5.4 million tonnes, or by almost 600%.

BHP president of minerals for the Americas, Ragnar Udd, expressed his optimism for a growing demand in the future at the CRU World Copper Conference in Chile.

“A great example is electric vehicles. Policy signposts for rapid electric vehicle (EV) adoption were distinctly favourable over the last (12) months and we have revised our internal EV penetration forecasts upwards,” he said.

“These vehicles use four times as much copper as petrol-based cars, and they will also need more infrastructure to connect charging stations to the grid.”

BHP expects the world’s Paris-aligned emissions reduction targets to more than double the demand for copper and quadruple for nickel over the next 30 years.

“It’s all copper, copper, copper, copper, copper, copper,” said mining magnate Robert Friedland during the CRU World Copper Conference.

Mining companies will have to be “real heroes” and governments will need to accept the industry if the world is to successfully transition to clean energy and transport, said the co-chairman of Ivanhoe Mines.

Goldman Sachs metals strategist Nicholas Snowdon says environmental policies will drive a capex boom on par with the 1970s and 2000s over the course of the next decade and copper is the core of the green energy transition.

“We estimate nearly $16 trillion would have to go into green-focused infrastructure to achieve decarbonisation targets, compared to just $10 trillion in China during the last supercycle.” said Snowdon.


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