Agencies
Workers at the world’s largest copper mine in northern Chile launched a strike action after pay talks with Australian resources giant BHP failed, casting a shadow of uncertainty over the commodity market on Wednesday.
The Escondida mine in Chile yearly digs up around 5% of the world’s copper, a coveted metal used in everything from electrical wiring to rechargeable batteries.
A global glut in copper stockpiles should blunt the immediate impact of the strike, analysts said, although there are fears it could start to bite if production is slowed for more than a week or two.
Australian-based BHP, which owns a majority stake in the vast open-air mine, said scaled-back operations would continue as non-union staff put contingency plans into action.
Production ground to a halt at the Escondida mine when workers downed tools for 44 days in 2017. This cost BHP $740 million and wiped 1.3% off Chile’s annual economic output.
Encouraged by surging global prices earlier this year, union representatives have sought a bigger slice of profits for the 2,400 workers they reportedly represent at Escondida.
The union said it launched a “legal strike” over unmet demands, including bigger bonuses, shorter work days, and compensation tied to the total number of years worked at the mine.
Media reports in Chile said BHP had offered a one-off bonus of nearly $29,000, lower than the $36,000 demanded.The buoyant copper prices seen in May this year have sagged in recent months, with significant stockpiles of refined metal building in the depots of China and elsewhere.
“Total stocks at warehouses monitored by the exchanges in London and Shanghai have risen to levels not seen since the depth of the pandemic back in early 2020,” said Saxo Markets commodity analyst Ole Hansen in a recent research note.
“Instead, we have seen inventories monitored by the major futures exchanges continuing to rise rapidly, signaling a period of a major supply/demand mismatch, primarily due to weak demand.” BHP’s share price in Sydney dropped by around 1% by noon on Wednesday.
