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Contract Negotiations Threaten To Derail The World’s Largest Copper Mine

It’s contract negotiation season in the world’s largest copper-producing nation, Chile. And news this week suggests that the country’s biggest mining operation may be headed for some tense discussions with workers.

That’s Escondida, the world’s biggest copper mine — where workers issued a challenge to management this past week, asking for more cash even as profits are falling.

Local press reported that Escondida’s top union — representing 2,500 mineworkers — has asked for an overall bonus of $25 million. Which is actually higher than the $23 million bonus negotiated during the last round of collective bargaining, which took place in 2013.

The union handed this petition to Escondida’s owner BHP Billiton on Monday. Firing this first salvo in the bargaining round, which is supposed to take place during the first weeks of 2017.

The demand for more cash to workers comes at an inopportune time for management — with Escondida having just reported a 43 percent drop in third-quarter profits, to $671 million. Mainly driven by this year’s steep decline in the copper price.

But Escondida’s workers say they are doing their part to keep the mine profitable. With the union noting that since 2013, Escondida has been extremely productive — putting out an average of 100 tonnes of copper per worker, as compared to other companies in Chile that produce between 30 to 45 tonnes per worker.

Related: Can U.S. Shale Add 1 Million Bpd In 2017?

All of which sets up for some tense negotiations over the coming weeks. Mineworkers may well have a point that they are fulfilling their duties in making Escondida run shipshape — but management is unlikely to be in a mood to increase payouts amid the current slump in the copper market.

The ultimate settlement here is a critical one. Given that the new contract will last until 2019 — a period that could be pivotal for this mine and the copper industry in general. Watch to see what gets decided and how much management is willing give in keeping this bellwether copper operation running.

Here’s to a tug of war,

By Dave Forest

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  • Bill Simpson on December 30 2016 said:
    How many people know that one of the largest copper deposits ever found on Earth is sitting on the southern coast of Alaska? Development has been blocked by a handful of fishermen and radical environmentalists.
    That, my friends, is a perfect example what is wrong with America today - minority rule.
    It is one reason why China will be calling the shots around the world far sooner than would otherwise be the case. Your offspring will be a lot poorer than they would have been, after the tide turns to global totalitarianism. You children will be able to thank a handful of politicians who were worried more about reelection, than they were worried about the general welfare of the 320,000,000 American citizens.
    Of course, after things get bad enough, some form of dictatorship will eventually run the country. He will go after the copper, gold, and silver, like the Russians and Chinese do today. Fisherman and environmentalists will have to keep their mouth shut, or they will disappear.

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