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BHP mine struggling to stave off title of longest Chile strike

22nd March 2017

By: Bloomberg

  

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SANTIAGO – The biggest copper mine in the world owned by the largest mining company is about to gain another, less desirable superlative – that of Chile’s longest mining strike in a generation.

Management and union representatives at BHP Billiton’s Escondida are entering into another round of talks on Wednesday with the strike in its forty-second day. Unless the negotiating teams manage to bridge the still-wide gap in wage and benefit expectations, the strike will overtake a 42-day stoppage at BHP’s Spence mine in 2009.

“We hope that this strike will be solved through a direct agreement between the parties,” the union representing about 2 500 striking workers said in statement posted on its website late Tuesday. “But we must be aware and ready for anything.”

The copper market has been betting that a deal isn’t far away, with prices retreating more than 3% since talks resumed on Monday. The dispute has crippled output at a mine that accounts for about 5% of global production and, coming at a time of disruptions at other mines, had helped push up prices of the metal. A resolution also would be a relief for owners of other mines with labor contracts up for renewal.

Key in the impasse is the union’s demand that Escondida guarantees that benefits and working hours will remain intact and no distinction will be made between existing workers and new hires.

On Monday, the two sides held their ground, union spokesperson Carlos Allendes said, calling a meeting that stretched past midnight a conversation rather than a negotiation.

"The process is going through a phase of putting the cards on the table and seeing what are the demands of both sides," he said by telephone. "The company says they have the intention to improve their offer. But we need to go through these three points to keep negotiating."

In a new contract proposal made public on Friday, BHP addressed the union’s three demands and made a more generous offer, including a higher end-of-conflict bonus. But the company’s focus on wages rather than benefits didn’t satisfy workers, who overwhelmingly rejected the new proposal on Sunday and Monday.

The new contract has a different payment structure partly because workers were being paid bonuses for jobs they don’t do anymore, Marcos Lagos, Escondida’s head of the negotiating commission, said in a letter to workers.

"Our objective is that workers keep a level of income equivalent to what they currently have," Lagos wrote. "Those who join the company in the future will still have one of the best collective contracts in the country and among the best wages of the mining market."

One point of contention is health benefits for existing and new workers. At the moment, Escondida’s operators and maintenance workers have free and full coverage for themselves and their family. They reject the company’s proposal that workers who join in the future do so under a company-subsidized regime, even if it’s similar to the one used by supervisors and executives.

While the impasse is far from resolved, the strike entered a new phase with the meeting on Monday, Allendes said.

"This is a phase where we need to make decisions," he said. "This has to be resolved. It can’t go on for much longer."

On Monday, workers voted in favor of allowing union leaders to invoke an article in the Chilean labor code that would allow them to go back to their previous contract for 18 months. Negotiations for a new contract would then take place in 2018, under new rules in force from April 1. Chile’s new law says the previous contract must be used as a negotiating floor during collective bargaining processes.

"We are not the ones losing here, we are prepared to go back to our old contract to save what we have," Allendes said. "But there is hope that we can solve this in the best way."

Edited by Bloomberg

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