Copper sector keeping a close eye on labor negotiations in 2017

April 3, 2017

A historic 43-day strike at the Escondida Mine in Chile ended when mine owner BHP Billiton agreed to temporarily extend its old contract to the striking workers. This was seen as win for those on strike and could potentially have an impact on scores of contract negotiations that are scheduled for the coming year in the copper sector.

Reuters reported that labor relations were sure to be a topic of conversation at the annual CRU World Copper Conference in Santiago, Chile that began on April 3. While there was no guarantee that the events from Escondida would trigger strikes at other mines, the possibility still is sure to raise concerns for a sector that has struggled with low price and oversupply recently.

Workers at Peru's important Cerro Verde have also been on strike and a cluster of other mines responsible for a combined 6 percent of global copper output are due to negotiate wage deals in Chile in the coming months. Contract talks are scheduled this year, including at Anglo American Plc and Glencore Plc's Collahuasi and Antofagasta's Zaldivar. In both cases, the two sides are already trying to find common ground, Reuters reported.

"Collahuasi and its union leaders meet habitually to talk about items of mutual interest, looking for the best option for the company and its workers," Collahuasi spokeswoman Bernardita Fernandez said.

Antofagasta, meanwhile, said it had preemptively agreed with the Zaldivar union to a definition of the activities that can continue at the mine in case of a union strike.

Both unions told Reuters that they had solid relationships with their companies.

Their talks will likely take a different tack to Escondida's, industry experts say.

"Escondida has unique conditions that evidently do not apply to other mines, starting with the fact that it is twice as big," said a copper trader. It also has an unusually powerful union.

And some of the company provisions that upset the Escondida union will no longer be up for negotiation. On April 8, a complex and wide-ranging new labor reform that strengthens the hand of unions, passed last year by Chile's center-left government, goes into effect.

Nonetheless, the tense talks at Escondida could have a spillover effect, said the head of Zaldivar's main union, Raul Torres.

"We're close to the union leaders at Escondida, and we keep up with what happens there," said Torres.



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