Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
A months-long wage negotiation at the world’s biggest copper mine is heading into a tense finale over the coming days.
The main union at Chile’s Escondida is calling on workers to be ready to strike amid limited progress in mediated talks. But owner BHP Group said it had made substantial improvements and vowed to continue its practice of not sweetening offers during strikes.
Wage talks at a mine that accounts for about 5% of global production are being closely watched by the copper market as trillions of dollars in government stimulus fuel demand for industrial metals. Traders will have to navigate Chile’s somewhat complex labor rules to figure out the likely next steps.
After workers rejected BHP’s final wage offer in regular talks, the company exercised its option of a five-day mediation period in a bid to avert a strike. That period ends Monday. If the two sides fail to reach a deal by then, they could agree to extend mediation for as many as five more business days or a legal strike could begin.
The two sides don’t seem too far apart in terms of benefits. The union requested a bonus equivalent to 1% of the company’s profit, which would be about 21 million pesos ($26,600) each worker. In regular talks, the company offered 18 million pesos apiece and says it has sweetened terms during mediation. They may be further apart in base wages.
According to consultancy firm Plusmining, any strike would probably be shorter than the 44-day stoppage that roiled the copper market in 2017. The union would have the option, as it took up four years ago, to end the strike by freezing the current contract for 18 months and negotiate again, without receiving any bonus now. But given the company submitted an offer higher than the legal floor, workers could only take up that option after 30 days, which would put pressure on their personal finances.
While the union says BHP hasn’t done enough during mediation and attached conditions to proposed benefits, the company is ratcheting up its own pressure to get a deal done. The cost of a prolonged strike at a time of sky-high copper prices would also be heavy for the Melbourne-based miner.
“We have gone to great lengths to reach an agreement during the process, and especially in mandatory mediation,” the company said in a text message late Friday. “We hope that these efforts will be appreciated by the workers because the offer in mediation will be the best that the company will present.”
(By James Attwood)
Comments