One of the world’s largest copper mines just came back online — with Freeport’s Grasberg, Indonesia operation reportedly finalizing paperwork to resume concentrate exports, after a 12-week standoff with the government.

But just as that mine restarts, another major operation could be going offline.

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Copper

The Toquepala complex in Peru, run by Grupo Mexico subsidiary Southern Copper.

Unions at the facility — which includes the Cuajone and Toquepala mines, and the Ilo copper smelter — launched a strike Monday. Which labor officials said involves 2,200 workers, affecting 80% of operations across the complex.

Southern Copper management announced that production has not yet been affected. With officials saying that  output from the two mines was running at 98%, and the smelter at 100%.

But it appears likely the labor action will take a toll over the coming days. With union leaders saying more workers plan to join the strike late this week.

Unions also said they would block train tracks, to prevent rail service to and from the facility.

All of which suggests we could see another copper supply disruption here. Very similar to the 43-day strike that ended last month at the Escondida mine in Chile, as well as the 21-day stoppage that hit Freeport’s Cerro Verde mine in Peru during March.

Demands from unions at Toquepala are similar to both those cases. With workers asking for a larger share of profits — in addition to improvements in health care and paid leave.

Output from Toquepala isn’t as big as either Cerro Verde or Escondida — currently running at about 60,000 tonnes per day of ore processing, as compared to 360,000 t/d for Cerro Verde.

But Southern Copper is currently in the middle of a $1.2 billion upgrade to the mine, to expand to 120,000 t/d. With that partially-sunk investment making this a critical center of growth for the company.

The next moves will be important, with the company reportedly considering bringing in temporary workers to replace strikers. That could raise potential for more-violent clashes here, perhaps lengthening the strike. Watch for the news on those developments — and for upward support in copper prices if Toquepala’s production goes offline.

Here’s to making it work,

Dave Forest

Article by Pierce Points