By Fabian Cambero and Alexander Villegas
SANTIAGO (Reuters) – A powerful union behind a strike at BHP’s giant Escondida mine, which produced nearly 5% of the world’s copper in 2023, wants to halt production at the site in order to get a bigger share of the profits.
The union, which launched a strike on Tuesday, had previously shut down the world’s largest copper mine and sent global copper prices soaring. This time, much depends on how quickly negotiations can resolve the conflict.
“(Escondida’s union) has a history of tough negotiations and has not shied away from striking to achieve its goals,” said Andres Gonzalez, head of the Santiago-based consulting firm Plusmining.
When the union went on a 44-day strike in 2017, global copper prices soared because BHP declared “force majeure” two days after the strike began, preventing it from fulfilling its contracts.
In 2006, the company also had to declare force majeure after a 26-day strike, and in 2011 the union shut down operations for 14 days. In 2015, the union went on hunger strike. In 2021, a strike was narrowly avoided despite the labor dispute.
Three elements make the union particularly strong, Gonzalez said. The union has about 2,400 members, or about 61 percent of Escondida’s workforce. It has strong financial reserves to support workers during a strike. And finally, Chilean law does not allow the company to replace striking workers.
“The company will be forced to shut down an important part of its operations, which obviously gives (the union) enormous bargaining power,” Gonzalez added.
The Sindicato Nro. 1 (Union No. 1) union represents not only the majority of the total workforce, but also 98% of the workers on Escondida’s production line, including machine operators, drivers, technicians and maintenance workers – all of whom are critical to maintaining production.
Patricio Tapia, president of the Escondida union since 2016 and part of the union leadership since 2008, had previously told Reuters that the union had four times more resources than in 2017, as well as loans to cover workers’ needs during the strike.
The 2017 strike ended when the union used local law to freeze the expired contract and then negotiated for another 18 months.
COPPER MARKET QUIET FOR NOW
BHP said on Tuesday evening that the union had rejected the latest invitation to resume talks, but the employee organization said it was ready to resume dialogue.
The company said its contingency plan includes allowing non-union workers to continue working and that operations would continue, but it did not specify to what extent.
“The union (Escondida) may be small compared to others, but it is made up of more than 2,000 people who control the largest copper mine in the world,” says Gustavo Lagos, an analyst at the Mining Center of the Catholic University of Chile.
A smaller strike at Lundin’s Caserones mine, also in Chile, is likely to have less of an impact on production, as only 30 percent of workers there are members of the mine’s union.
Copper prices have not yet been significantly impacted by the current strike. Analysts attribute this to weak demand from the largest copper consumer, China, and hope for a quick solution. However, this could change if the strike intensifies.
A key sticking point is the union’s demand to pay 1% of the mine’s shareholder dividends to workers, which analysts estimate would be about $35,000. The union had also demanded this in 2021, but was able to reach an agreement that included a bonus of about $23,000 and nearly $4,000 in overtime pay.
This time, BHP offered employees a bonus of $28,900.
(Reporting by Fabian Cambero and Alexander Villegas; editing by Sonali Paul)
