june 2011 - quarterly review, page-26

Hi all I think this has something/a little to do with the reason copper price seems to be holding fairly well even when there been a bit of doom and gloom around on some days when you would think the price of spot copper should be tracking a little more south instead of north.

No end in sight to Escondida action
Published 7:57 AM, 27 Jul 2011


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QUICK SUMMARY | FULL STORY | RESOURCES & ENERGY | BHP

Reuters

ANTOFAGASTA - A five-day strike at Chile's giant Escondida mine appeared far from ending after the mine snubbed government mediation, threatening to spread labour turmoil in the world's top copper producer.

Escondida, majority owned by BHP Billiton Ltd, has dug in, refusing a labour authority invitation for talks and taking a hard line that could prolong the disruption at a mine that extracts seven per cent of the world's copper.

The stoppage struck out of the blue last week, the latest in a wave of labour unrest to spread at mines in Chile and afar afield as Indonesia as workers demand more from a copper price bonanza fed by China's appetite for the metal.

It also comes just days after a walkout by workers at state giant Codelco - the first in nearly 20 years - and six months following a month-long strike at the world's third largest copper mine, Chile's Collahuasi.

Raising the spectre of contagion, a Collahuasi union leader told Reuters workers would hold an urgent meeting later on Tuesday and could strike if their bonus demands are ignored.

Escondida, the world's top copper mine, said it would not talk to workers as long as they continued their strike to demand bonuses linked to company earnings.

Traders fear a tough stance could prolong the strike at a mine that last year sold $US9.2 billion ($A13.8 billion) in copper.

However, the union extended an olive branch on Tuesday, asking the labor authority for fresh talks.

"The company did not attend the meeting today, but the union has asked for a second meeting on Thursday to resume dialogue as a way to solve the conflict," head of the Antofagasta labor authority Marcelo Pizarro said.

Escondida may lose about 3,000 tonnes of output per day during the strike, which on Tuesday boosted copper prices to $US9,820 a tonne - its highest level in a week .

"We cannot talk with the union while they are not working," external affairs official at BHP Billiton Base Metals unit in Santiago Maria Olivia Recart said.

"We cannot validate a mediation process when there is no collective wage negotiation ongoing and the strike is illegal."

If BHP bows to the union demands it could embolden workers at other mines to use similar aggressive tactics.

The strike comes on the heels of a 24-hour stoppage by workers at state copper giant Codelco, which experts say has encouraged private-sector miners to increase pay demands as prices of the metal hover near record highs.

In a move that could defuse threats for another stoppage, President Sebastian Pinera agreed to meet for the first time with Codelco unions on Wednesday.

Workers have demanded more say in the restructuring of the world's top copper miner.

The Escondida strike marks a rare precedent among private mines in Chile where strict labour laws allow employers to fire workers who strike outside collective contract negotiations.

Escondida settled a 44-month contract with workers in 2009, so the latest stoppage is a signal unions have an increasingly short fuse and have been encouraged by a raft of protests by miners, environmentalists and students against the government of increasingly unpopular President Sebastian Pinera.

"This strike at Escondida is kind of a new way in which Chilean strikers are conducting themselves. Typically, they do it ahead of their contract negotiations ... they don't just drop shovel," analyst at Mitsui Bussan Commodities in New York Justin Lennon said.

Around 9,000 subcontract workers were due to join the protest on Tuesday.

Union leaders say Escondida is near declaring force majeure - a contract clause that frees it of liability on shipment delays � on copper sales. BHP will advise clients first.

BHP said its main port of Coloso was operating, despite witness accounts that it was deserted on Monday.