Anika Begay
By Fabian Cambero and Alexander Villegas
SANTIAGO (Reuters) – A powerful workers union that has led a strike at BHP’s huge Escondida mine, which produced nearly 5% of the world’s oil in 2023, is trying to block production at the site while demanding a bigger share of profits.
The union, which launched a strike on Tuesday, has already paralyzed the world’s largest copper mine and sent global copper prices soaring. This time, much will depend on how quickly negotiations can break the deadlock.
“(The Escondida union) has a history of tough negotiations, not being afraid to strike to achieve its goals,” said Andres Gonzalez, head of the Santiago-based consultancy Plusmining.
When the union called a 44-day strike in 2017, global copper prices rose because BHP declared “force majeure” two days into the strike, meaning it could not honour its contracts.
The company also had to declare force majeure in 2006 after a 26-day strike, and in 2011 the union stopped operations for 14 days. The union went on a hunger strike in 2015. A strike was barely averted in 2021 despite a labor dispute.
Three things make the union particularly strong, Gonzalez said. The union has about 2,400 members, about 61 percent of Escondida’s workforce. It has strong financial reserves to care for workers during a strike. And finally, Chilean law does not allow the company to replace striking workers.
“The company will be forced to stop a significant part of its operations, which obviously gives (the union) enormous bargaining power,” Gonzalez added.
In addition to making up the majority of the total workforce, Sindicato Nro. 1 (Union No. 1) represents 98 percent of Escondida’s front-line workers, including machine operators, drivers, technicians and maintenance workers, all of whom are essential to keeping production running.
Patricio Tapia, president of the Escondida union since 2016 and a member of the union leadership since 2008, previously told Reuters that the union has four times more funds than in 2017, as well as credits to meet workers’ needs during the strike.
The 2017 strike ended when the union used local legislation to freeze the expired contract and then negotiated for another 18 months.
COPPER MARKET CALM FOR NOW
BHP said on Tuesday evening that the union had rejected its latest call to resume talks, although the union group said it was willing to resume dialogue.
The company said its contingency plan includes allowing non-union workers to continue working and that operations are continuing, though it did not specify to what extent.
“The (Escondida) union may be small compared to others, but more than 2,000 people control the world’s largest copper mine,” said Gustavo Lagos, an analyst at the Catholic University of Chile’s mining center.
A smaller strike currently underway at the Caserones mine in Lundin, also in Chile, is less likely to impact production, as only 30 percent of workers are union members at the mine.
Copper prices have not yet seen much of an impact from the ongoing strike, with analysts citing weak demand from major copper consumer China and hopes for a quick resolution. However, that could change if the strike action escalates.
One sticking point is the union’s demand to distribute 1% of the mine’s shareholder dividends to workers, which would amount to about $35,000, according to analysts. The union had also demanded this in 2021, but managed to reach a deal that included a bonus of about $23,000 and nearly $4,000 in overtime bonuses.
This time, BHP offered workers a bonus of $28,900.
