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World largest copper mine on strike

Monday, August 7th 2006 - 21:00 UTC
Full article

Over two thousand workers from Chile's Escondida mine, the world's largest private producer of copper began Monday a strike demanding higher salaries and other benefits in line with the soaring price of Chile's main export commodity.

The daily production of the mine is 3,546 tons, equivalent to 23.5% of Chile's copper output and 8% of world production.

Analysts forecast that the strike will have an important impact on the market and will exert upward pressure on the international copper price which in the last two years has broken several records.

The strike began with a march in the northern city of Antofagasta with the participation of an estimated 2,200 workers who came from the mine located in the Atacama Desert. The mine is owned by the Australian firm BHP-Billiton (57.5%) and Rio Tinto (30%) and is the largest open cut of its kind in the world.

The work stoppage follows the failure of negotiations for a new collective contract between the miners' union and the firm.

"Almost 60% of production has been affected" admitted the company's vice president for corporate affairs Mauro Valdes, a few hours after the strike started. Business sources estimate the mine's inactivity will cause losses ranging between 15 and 20 million US dollars per day.

Spurred by high copper prices which have increased almost five fold, the union is demanding a salary hike of 13% plus a special bonus of almost 30.000 US dollars per worker. The latest proposal from the company was a 3% salary hike and a bonus of 21.481 US dollars for each worker.

In 2005, the Escondida mine reported net profits of 2.58 billion on sales of 4.36 billion US dollars. In the last two years copper prices shot from an average 67 US cents the pound to an average 3.50 US dollars.

Chile's ministerial cabinet secretary Ricardo Lagos Weber downplayed the impact of the strike and said he was looking forward to a "quick understanding" between the mines and the company.

"The strike is legal in Chile for all workers, and this is something between a private company, --yes the largest copper company in the world-- and therefore is in the limelight and receives a major coverage", said Lagos Weber.

Categories: Mercosur.

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