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6 months ago
BHP in for the long haul on Escondida strike as it eyes 30-day wait
February 22, 2017 / 6:55 PM / 6 months ago

BHP in for the long haul on Escondida strike as it eyes 30-day wait

FILE PHOTO - Explosions blast rock mass at BHP Billiton's Escondida, the world's biggest copper mine, in Antofagasta, Chile March 31, 2008.Ivan Alvarado

SANTIAGO (Reuters) - BHP Billiton's decision this week to give up its legal right to replace striking workers at the Escondida copper mine in Chile is a move aimed at sacrificing some output to undermine the union's position, analysts said Wednesday.

The strike began on Feb 9, after workers voted overwhelmingly to reject a wage contract offer by BHP Billiton (BLT.L) (BHP.AX). That led BHP to say it would not be able to meet contractual commitments, driving the copper price CMCU3 up on supply concerns.

BHP made a surprise announcement on Tuesday, saying it would not seek to exercise its right to replace the 2,500 striking workers after 15 days - which would have been this Friday. Instead, it said it would wait at least 30 days.

The company said this was to assure the safety of its workers but industry experts say it was a strategic move that puts the ball in the union's court.

After 30 days, workers can individually exit the strike and accept the company's offer, weakening the union's position.

Juan Carlos Guajardo, an industry veteran and consultant at Plusmining, said the delay would ease tension after day 15 of the strike, when the company could have brought in temporary workers if it had sought to.

"By delaying to day 30 it prevents the risk of days 15 to 30 being violent, something which could provoke the workers," said Guajardo.

"On day 30 the invitation to leave the strike will therefore be better received."

Previous strikes in Chile have seen clashes with striking miners trying to prevent temporary workers entering the mine.

Camped out under burning daytime sunshine and cold nights in the Atacama Desert next to the mine, workers' enthusiasm for the strike may begin to crack, although the union insists its members remain united.

"The guys are relaxed, they're okay, some are heading to town to rest and next week they will come back with more energy for however long it takes," said union spokesman Carlos Allendes.

Escondida in northern Chile is by far the world's largest copper mine. At usual output rates, some 40,000 tonnes of copper has been taken out of supply during the strike to date - equivalent to the annual production of a mid-sized mine.

A government-mediated attempt at restarting talks foundered on Monday, with the two sides far apart on issues such as benefits for new workers and shift changes.

Both sides say they remain open to dialogue but firm in their positions. Despite Monday's failure, the government has said it will continue to push to get the two sides back at the negotiating table.

Other miners - including those at Chile's no.2 mine, Anglo American (AAL.L) and Glencore's (GLEN.L) Collahuasi, which has contract talks due later this year - will be watching carefully.

Reporting by Fabian Cambero; Writing by Rosalba O'Brien; Editing by Alistair Bell

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