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BHP (ASX, LON, NYSE: BHP) and union leaders in Chile reached a preliminary wage agreement on Friday to end a strike at Escondida, the world’s largest copper mine.
The union, representing about 2,400 workers, initiated the strike on Tuesday after failing to reach a pay deal.
A central point in the negotiations was the union’s demand for 1% of shareholder dividends from the mine, or about $35,000 per worker. The company had offered a bonus of $28,900 before the strike.
“BHP and Union No. 1 have come to an agreement for a collective contract proposal. Along with that, it was agreed to suspend the strike underway as of this Friday, Aug. 16, at 8 a.m.,” BHP said in a statement.
The new deal could be signed on Sunday after union leadership meets with members.
Escondida accounts for about 5% of the world’s mined copper, producing more than 1 million metric tonnes of the metal a year.
Based on data from the state-run Chilean Copper Commission (Cochilco), Escondida accounted for 23.7% of the country’s copper production during the first half of the year. This is almost the same amount produced by Chile’s Codelco, the world’s largest copper producer, during the same period.
The mine produced 614,400 tonnes of copper in the first six months of 2024, according to Cochilco. Chile’s total production of the red metal during this period amounted to 2.6 million tonnes.
Copper for delivery in September fell 1.2% from Thursday’s settlement after the news, touching $4.10 per pound ($9,020 per tonne) on Friday morning on the Comex market in New York.
“Strikes usually don’t tend to be long-lasting in Chile, and so the market may have been reluctant to react to it too much in the early stages,” Michael Widmer, head of metals research at Bank of America, told Bloomberg.
“The bigger issue right now is how we’re doing on the demand side, and that’s probably why the market hasn’t focused on it so much.”
The last significant strike at Escondida occurred in 2017, lasting 44 days. The stoppage hurt production, drove global copper prices up, and became the longest private-sector mining strike in Chile’s history. It is estimated that Escondida failed to produce more than 120,000 tonnes of the red metal due to that strike.
