Source: Mining Industry

Escondida Copper Mine, Chile

The tightening global copper market is facing the risk of simultaneous strikes at three mines in the world's largest copper producer, Chile.

So far, the most serious threat to global supply comes from the world's largest copper mine, Escondida, which last week voted down the final wage proposal from its owner, BHP Group (click to view previous reports from the mining industry). Unless an agreement can be reached in government-mediated negotiations this week, the project, which produced 1.2 million tons of copper last year, will face shutdown.

The other two smaller mines—Andina, owned by Codelco, and Caserones, owned by JX Nippon Mining & Metals—are also at the same stage of collective negotiations.

At this sensitive moment before the global metal cycle and Chile's elections, strikes put 7% of global copper production at risk.

As the U.S. government rolls out trillions of dollars in stimulus measures to boost demand for copper, labor tensions in Chile are escalating. After falling from a historic high in May, copper prices have rebounded in the past two cycles.

High copper prices and strong demand for copper have encouraged miners, and the host country is also considering raising taxes to help address the social inequalities exacerbated by the pandemic. In Chile, as the country drafts a new constitution, stricter regulations may be established regarding water, glaciers, minerals, and community rights, with presidential elections also taking place in November.

Meanwhile, as ore grades decline and input prices begin to rise, companies are struggling to control labor costs in cyclical businesses.

In last week's vote, union members overwhelmingly rejected BHP's proposal with 99.5% of the vote. Union leaders stated that the company would issue a large one-time bonus in exchange for longer working hours and new demands to increase productivity and profits. BHP stated that its proposal included better conditions and new benefits, and expressed a willingness to continue dialogue.

The union stated: "If BHP wishes to avoid what could be the costliest long-term conflict in the history of the country's unions, we hope this strong vote will serve as a decisive wake-up call for BHP to initiate substantive discussions to reach a satisfactory agreement."

Source: Mining.com