Could a union stop production at the world’s biggest copper mine? By Reuters

By Fabian Cambero and Alexander Villegas

SANTIAGO (Reuters) – A powerful workers’ union behind a strike at BHP’s huge Escondida mine, which produced almost 5 percent of the world’s mine in 2023, is trying to increase production at the site as it pushes for a higher quota big profit.

The union, which launched a strike on Tuesday, had previously paralyzed the world’s largest copper mine and pushed up global copper prices. This time, much depends on how quickly negotiations can unblock the deadlock.

“(The Escondida syndicate) has a history of tough negotiations, not afraid to strike to achieve their goals,” said Andres Gonzalez, head of Santiago-based consulting firm Plusmining.

When the union staged a 44-day strike in 2017, global copper prices rose as BHP declared “force majeure” two days into the strike, meaning it could not fulfill its contracts.

The company was also forced to declare force majeure in 2006 after a 26-day strike, and in 2011 the union stopped work for 14 days. The union went on hunger strike in 2015. A strike was just averted in 2021 despite a labor dispute.

Three elements 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 take care of workers during a strike. And finally, Chilean law does not allow the company to replace striking workers.

“The company will be forced to shut down a significant portion of their operations, which obviously gives (the union) tremendous bargaining power,” Gonzalez added.

In addition to comprising the majority of the total workforce, Union No. 1 (Union No. 1) represents 98 percent of Escondida’s front-line workers, which include machine operators, drivers, technicians and maintenance workers – all key to keeping production going.

Patricio Tapia, president of the Escondida union since 2016 and part of the union’s 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 another 18 months.

COPPER MARKET CALM FOR NOW

BHP said late on Tuesday that the union had rejected the latest invitation to resume talks, although the union group said it was willing to resume dialogue.

The company said its contingency plan calls for allowing non-union workers to continue working and that operations are continuing, though it did not specify to what extent.

“The union (Escondida) might be small compared to others, but there are more than 2,000 people who control the biggest copper mine in the world,” said Gustavo Lagos, an analyst at the Mining Center of the Catholic University of Chile.

A smaller ongoing strike at Lundin’s Caserones mine, also in Chile, is less likely to affect production because only 30 percent of workers there are unionized at the mine.

Copper prices have yet to see much impact from the current strike, with analysts citing weak demand from top copper consumer China and hoping for a quick resolution. However, this could change if strike action intensifies.

A key sticking point is the union’s demand that 1 percent of the mine’s shareholder dividends be distributed to workers, which analysts estimate would be around $35,000. The union also asked for it in 2021, but was able to reach a deal that included a bonus of about $23,000 and nearly $4,000 in overtime bonuses.

BHP gave workers a bonus of $28,900 this time.