Fabian Cambero and Alexander Villegas
SANTIAGO (Reuters) – Powerful unions striking at BHP's giant Escondida mine, which produced about 5 percent of the world's copper in 2023, are seeking to disrupt production at the mine, demanding a bigger share of profits.
The union, which began striking on Tuesday, has previously crippled the world's biggest copper mine and sent global copper prices soaring. This time, much will depend on how quickly negotiations can break the deadlock.
“(The Escondida union) has a history of tough negotiations, even going so far as to strike to achieve their goals,” said Andres Gonzalez, head of Santiago-based consultancy PlusMining.
When unions went on strike for 44 days in 2017, global copper prices soared after BHP declared “force majeure” two days after the strike began and was unable to honour its contract.
The company also had to declare force majeure in 2006 after a 26-day strike, and in 2011 the union halted operations for 14 days. The union staged a hunger strike in 2015. A strike was narrowly avoided in 2021 despite labor unrest.
Gonzalez said three factors make the union particularly strong: It has about 2,400 members, or about 61 percent of Escondida's workforce; it has deep pockets to support workers during a strike; and finally, Chilean law prevents the company from replacing striking workers.
“It will force the company to shut down significant parts of its operations, which obviously gives (the union) greater bargaining power,” Gonzalez added.
In addition to making up the majority of the overall workforce, Sindicato Nro. 1 (Union Number 1) also represents 98 percent of Escondida's frontline workers, including machine operators, drivers, technicians and maintenance workers who play key roles in keeping production running.
Patricio Tapia, who has headed Escondida since 2016 and been a member of the union leadership since 2008, previously told Reuters the union had four times more funding than in 2017, as well as access to loans to meet the needs of striking workers.
The 2017 strike ended with the union using local legislation to freeze the expiring contract and negotiate for another 18 months.
Copper market calm for now
BHP said on Tuesday evening that the union had rejected the latest request to resume talks, but the company maintains it is willing to do so.
The company said its contingency plans state that non-union workers will be allowed to continue working, and that business is continuing, although it did not say to what extent.
The story continues
“The (Escondida) union may be small compared to others, but it has more than 2,000 people who manage the world's largest copper mine,” said Gustavo Lagos, an analyst at the Mining Center of Chile's Catholic University.
A small strike currently taking place at Lundin's Caserones mine, also in Chile, is not expected to have much of an impact on production as only 30 percent of employees are members of a mining union.
Copper prices have yet to see a major impact from the current strike, with analysts hoping for a quick resolution citing weak demand from China, the metal's biggest consumer, but that could change if the strike becomes more aggressive.
The main issue was the union's demand that 1% of the mine's shareholder dividends be distributed to workers, which analysts estimate amounts to about $35,000. The union made the same demand in 2021 but was able to reach an agreement that included a bonus of about $23,000 and overtime pay of about $4,000.
BHP is now offering staff a bonus of $28,900.
(Reporting by Fabian Cambero and Alexander Villegas; Editing by Sonali Paul)
