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Events
Global copper supply at risk as workers vote to strike www.bloomberg.com
A tightening global copper market is facing the real possibility of simultaneous strike disruptions at three mines in Chile, the top producer.
By far the most serious threat to global supplies comes from Escondida, the biggest copper mine in the world, where workers rejected owner BHP Group’s final wage offer in voting last week. Unless the two sides can reach a deal in government-mediated talks this week, the market may be left without production from a project that last year churned out 1.2 million metric tonnes.
Two other smaller mines — Codelco’s Andina and JX Nippon Mining & Metals’ Caserones — are at the same stage in their collective bargaining. That puts upwards of 7% of world production at risk in a particularly sensitive moment in the metal cycle and in Chilean politics.
Labor tensions are intensifying just as trillions of dollars in government stimulus fuel demand for industrial metals. Copper futures have gained over the past two weeks after retreating from an all-time high in May.
THE WINDFALL ENJOYED BY PRODUCERS IS EMBOLDENING MINE WORKERS, WITH HOST NATIONS ALSO LOOKING AT RATCHETING UP TAXES TO HELP RESOLVE INEQUALITIES EXACERBATED BY THE PANDEMIC
On Monday, prices advanced as much as 0.8% to $9,810 a tonne on the LME, and traded at $9,771.50 at 1:37 p.m. in London.
The windfall enjoyed by producers is emboldening mine workers, with host nations also looking at ratcheting up taxes to help resolve inequalities exacerbated by the pandemic. In Chile, that’s all playing out as the nation drafts a new constitution that may lead to tougher rules on water, glaciers, mineral and community rights, with presidential elections in November.
At the same time, companies are striving to keep labor costs in check in a cyclical business and as ore quality deteriorates and input prices start to rise.
In last week’s vote, members rejected BHP’s proposal by an overwhelming 99.5%. Union leaders say the company is dangling large one-time bonuses in exchange for longer hours and new demands in a bid to boost productivity and profit. BHP said its proposal included better conditions and new benefits and that it remains open to dialog.
“We hope that this strong vote will be the decisive wake-up call for BHP to initiate substantive discussions to reach satisfactory agreements, if it wants to avoid a lengthy conflict that could be the costliest in the country’s union history,” the union said.
(By James Attwood, with assistance from Alejandra Salgado)
Published Date:2021-08-03
