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CHILE: COPPER WORKERS' STRIKE SPREADS AS COLLAHUASI JOINS CODELCO

Published by MAC on 2007-07-11

CHILE: COPPER WORKERS' STRIKE SPREADS AS COLLAHUASI JOINS CODELCO

Tensions May Drive Copper Up To US$4 Per Pound

By Cynthia McMurry - SOURCES: REUTERS, EL MERCURIO, LA NACION, LA TERCERA, BLOOMBERG

11th July 2007

About 700 workers from northern Chile's Collahuasi copper mine began to strike on Monday. Collahuasi's strike, like the now 16-day old strike at Codelco, got off to a conflictive start, with violence and three arrests in the northern city of Iquique.

The Collahuasi strike caused copper prices to jump to $3.64 per pound, and industry experts predict the price may reach $4.00 per pound within the next few weeks if copper inventories continue to fall as a result of Chile's strikes and unrest in other copper producing countries. Chile is the world's most important copper producer, accounting for roughly one third of all copper production.

Collahuasi worker began their strike after demands for increased salary and benefits were rejected by the company. Collahuasi is controlled by industry heavyweights Xstrata and Anglo American. The mine is Chile's third-largest and accounts for eight percent of Chile's copper production and 2.6 percent of the world's total production.

On Monday, the first day of the Collahuasi strike, nearly 1,000 protesters marched towards the Spanish-American Health Ministers Conference that was being held in an Iquique hotel. According to labor leader Hernán Farías, the march was intended to highlight the health care concerns of Collahuasi workers, but was soon stopped by local police.

"Due to orders 'from above', they told us we could not go a step further," said Farias. "When we tried, police acted in a very violent manner, using tear gas bombs, water cannons and beating us." Three workers were arrested during the protest.

The mining company has initiated a contingency plan to replace the striking workers, and company officials said they do not expect to see any drop in production. Striking workers, however, say the mine is currently operating at less than 20 percent of its capacity.

Meanwhile, violent protests continue at the state-owned Codelco copper company, where workers have been striking for two weeks. The continued violence threatens ongoing talks between company officials and labor leaders.

About 25 strikers at Codelco's El Teniente mine in Region IV destroyed four copper transport trucks, stopped traffic and lit fires along the highway early Tuesday morning around 2 a.m. The trucks' drivers escaped unharmed. Later that morning, at 7:15, about 100 buses carrying first-shift workers were stoned; four of the buses were seriously damaged.

Codelco's Andean Division was evacuated Monday morning after a contracted driver suffered a serious head injury when strikers pelted the bus he was driving with rocks. Codelco's Andean Division accounts for 4.2 percent of Chile's total copper production.
Codelco officials were extremely unhappy with the violent acts occurring at the two divisions and threatened to halt negotiations. "It's unacceptable for anyone to have to negotiate with a gun held to their chest (…)," said Codelco negotiator Daniel Barrios on Tuesday. "Today, with all the violence that has occurred, we cannot continue at this table unless the violence is stopped."

Union leaders have been frustrated with the lack of progress made at the Codelco negotiating table, which was convened last Wednesday. Codelco has not yet agreed to increase pay or benefits for subcontracted workers, and union leaders plan to march down Santiago's central Alameda boulevard today, Wednesday, passing the La Moneda presidential palace and ending at Codelco's corporate headquarters.

Chile's labor problems coincide with labor unrest in another important copper-producing nations - Mexico and Canada - increasing the uncertainty in the international copper market. Workers from the Mexico Group – which produces 633,000 tons of copper per year – are threatening to strike next Monday. Another Xstrata company strike has been underway in Canada for the past three weeks at the CCR refinery, which produces 370,000 tons of copper annually.

Business news web sites report that copper prices are expected to increase by at least three to four percent within the next couple of weeks and JP Morgan experts estimate that copper could reach $3.90 per pound. Chile's Copper Studies Center put the figure at closer to $4.00 per pound, while Nick Moore, from London's ABN Amro Bank, speculated that $3.80 is a more realistic number.

Moore said the London Metal Exchange has been closely monitoring negotiations at Codelco and is concerned about copper inventories, which are at their lowest levels in nearly a year. "It's not a good sign that, in a year when profits have reached historic highs, companies are having problems with their employees. Without a doubt, the good spell that copper has seen puts pressure on mining companies, but there's also concern about inventory in the market, which is at historically low levels," said Moore.

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