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| REUTERS photo |
Workers at the world’s top copper mine, BHP Billiton’s Escondida in Chile, launched what they vowed would be a “long and hard” strike on Feb. 9, causing jitters on world commodity markets.
Escondida is the first of several key mines worldwide where contracts expire this year, and markets are watching nervously to see how the strike impacts supply and prices.
“The company is sticking to its inflexible stance. This will be a tough fight,” said Carlos Allendes, spokesman for the Escondida miners’ union.
“This could go on for a long time. We’re prepared to maintain a long and hard strike.”
BHP Billiton, one of the world’s leading mining consortiums, has rejected workers’ demands for a seven-percent raise and bonuses of 25 million pesos (around $39,000).
It is offering bonuses of eight million pesos, with no raise.
Like other miners, the Anglo-Australian company has had to cut costs as copper prices slid in recent years, from a record high of $10,190 per metric ton in February 2011 to $4,318 per ton in January 2016, to just over $6,000 today.
Ninety-nine percent of Escondida’s 2,500 workers voted on Feb. 7 to strike, after government-mediated negotiations collapsed.
Workers have set up a protest camp outside the giant mine complex in the Atacama desert in northern Chile.
They say they have a war chest of $390,000 to sustain the strike.
BHP Billiton, Escondida’s majority owner, has said it will suspend production for at least the first 15 days of the strike.
It urged employees to remain peaceful.
Escondida produces five percent of global copper output, some 927,000 metric tons (one million tons) a year.
“A strike at Escondida is important not just for the immediate effect on production and global balances, but also because it carries symbolic weight,” said analyst Dane Davis of Barclays.
Eight other major copper mines in Chile and around the world also face expiring contracts this year. That means the Escondida negotiations will be seen as a bellwether.
Including Escondida, the mines account for around 12 percent of the world’s total copper supply.
The red metal is a key component in wiring, and demand for heavy machinery, electrical grids and telecommunication networks drives prices up.
Renewed appetite in China, the world’s biggest copper consumer, is also shaping the market.
