The copper market got some good news on the supply front the last few days. With the Indonesian owners of the major Batu Hijau mine saying they have received permits to resume concentrate exports immediately.
But elsewhere, troubles are still looming large in copper supply. Especially at the world’s number one mine, Chile’s Escondida.
A complete strike by Escondida workers entered its third week this past Thursday. And news over the weekend suggests workers here may be digging in for even longer — making plans to shut down Escondida for up to two months.
Chilean press reported Saturday that Escondida’s Union No. 1 has signed a loan deal with local lenders Lautaro Rosas — for a contingency fund to pay workers in the event of a protracted strike.
The loan reportedly totals $1.5 million — which the union plans to use to pay members a stipend of $2,300 monthly.
With that cash in the bank, union officials said they can sustain the strike for up to two months. Which may throw a wrench into plans by Escondida’s owners BHP Billiton to get the mine back up and running.
BHP actually made an unusual move last week — giving up its right to replace striking workers, which under Chile law kicks in 15 days following the beginning of a labor action.
That means BHP could have brought in replacements starting last Friday. But the company preempted any such move, announcing Tuesday it would wait at least 30 days before considering any labor substitutions.
Labor specialists said the move was likely aimed at getting workers to return peacefully. Given that individual union members could choose to return to work after 30 days, under union strike rules.
BHP may thus have been hoping that a month without pay would entice workers back in early March. But the new loan deal changes all that — relieving the financial pressure that might have driven workers to rejoin the mine.
The cat-and-mouse situation here increasingly suggests we’re looking at a drawn-out stoppage. Watch for BHP’s moves around the 30th day of the strike (March 11).
Here’s to contingencies,
Article by PiercePoints