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.

Escondida Copper Mine
By The image was taken by the the Expedition 22 crew. [Public domain], via Wikimedia Commons
Escondida Copper Mine

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% 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.

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,

Dave Forest

Article by Pierce Points