Deep sea mining puts $560 billion in land extraction at risk — report
Even in optimal scenarios, the activity would generate only $6.25 million in tax revenue for countries involved, says Planet Tracker.
A strike at a major copper mine in the world’s largest producer of the metal risks wiping out 10,000 metric tons from a market that’s already expected to end the year in deficit, according to an industry consultant.
The stoppage at the Chuquicamata mine in northern Chile could cost No. 1 global supplier Codelco $50 million as it loses production if it lasts two weeks, said Juan Carlos Guajardo, executive director at Santiago-based consultancy Plusmining. The strike at the mine, which produced 321,000 tons of copper last year, entered its 11th day on Monday with no signs of agreement between the company and unions.
“While we have expectations of a prolonged period of trade friction, copper will struggle to get in the good books of macro asset allocators”
Colin Hamilton, analyst, BMO Capital Markets
“Codelco has been quite clear that they are offering the best possible terms for workers,” Guajardo said by phone on Monday. “And workers say the only way to end this conflict is not higher bonuses, but equal conditions between existing and new workers.”
Copper prices flipped between gains and losses on Monday as investors weighed demand concerns from global trade tensions against the supply threat at Chile’s state-owned Codelco. The disruption at Chuquicamata, the company’s third-largest mine, has helped lift the outlook for prices at a time when supply is already tight, with the International Copper Study Group forecasting a deficit of 189,000 tons by the end of this year.
BMO Capital Markets was estimating that 3% of global production in the copper market would be disrupted in 2019, but 5% of supplies has already been affected year to date, according to analyst Colin Hamilton. The Chuquicamata strike adds to other supply disruptions earlier in the year, including rains in northern Chile and stoppages at several smelters in Zambia amid a conflict between the government and mining companies operating there.
“While we have expectations of a prolonged period of trade friction, copper will struggle to get in the good books of macro asset allocators,” Hamilton said. “But the deficit the copper market has been waiting on for years is now here.”
No talks are scheduled between Codelco and Chuquicamata’s Unions 1, 2 and 3, which represent around 3,200 workers at the mine, Rolando Milla, president at Union No. 3, said Monday by phone. Chuquicamata workers blocked the road that leads to the company’s northern division, and to Freeport-McMoRan Inc.‘s El Abra mine for over three hours on Monday in a protest that delayed workers from reporting to the facility.
A Codelco official declined to comment on the state of negotiations or the effects of the protests. While El Abra operations are running normally, Freeport is monitoring the situation, a company official said by email.
On Saturday, 55% of workers voted to reject the company’s latest offer and continue the strike. Under Chilean labor rules, Codelco can make a new offer on June 28, or workers can abandon the strike individually from June 29, automatically accepting a previous offer from the company.
One central issue in the negotiations is the retirement plans of about 1,700 workers whose jobs will be cut once the mine transitions from open pit to underground operations in the next 12 months. Younger workers — who joined the company after the last commodities downturn with lower salaries and fewer benefits — also want the same conditions as experienced workers.
“When the older workers leave as part of the retirement plan, it will be the young guys with precarious jobs who will replace them,” union leader Milla said. “The strike ends with equal conditions for all workers, that’s it.”
(By Laura Millan Lombrana)
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