Escondida workers likely to accept wage deal

18 October 2009 | 04:31 Code : 19589 Geoscience events
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Workers at the world’s biggest copper mine, Chile’s Escondida, are likely to accept...

Workers at the world’s biggest copper mine, Chile’s Escondida, are likely to accept an early wage deal offered by owner BHP Billiton, (BHP.AX: Quote) (BLT.L: Quote) and avert a strike, a senior union source told Reuters on Thursday.If the offer proves successful, the negotiation could set the tone for upcoming key labor negotiations in Chile, the world’s No. 1 copper producer, and ease supply worries that have helped to nearly double the price of the industrial metal this year."This is a historic deal," said the source, who asked not to be named because he was not allowed to speak publicly. "Workers at the mine will start voting on it today.Billiton started early talks with top union officials to avoid a stoppage similar to the 25-day strike in 2006 that hampered production and lifted world copper prices. The Escondida collective contract is due to expire on Dec. 5.The company offered to increase wages 5% over the 44-month contract and bonuses and benefits worth around $25,000 per worker, the union source said.Chile produces about a third of the world’s copper. Collective contracts at major mines are due around the time Chileans head to the polls on Dec. 13 to choose a new president."This sets a precedent that makes things more difficult for other companies heading toward negotiations," said Juan Carlos Guajardo, the head of the influential mining industry think tank Cesco. "Specially for (state miner) Codelco."Guajardo said that Billiton’s offer could prove difficult for other mining companies in Chile to match.Hundreds of workers at Codelco’s Andina copper mine this week rejected the company’s early contract offer before official negotiations.Until recently Codelco had for the most part succeeded in inking early deals with labor unions to avoid strikes. The company is scheduled to start contract talks with workers at its massive Chuquicamata copper mine later this year.Higher copper prices have emboldened mining workers around the world to demand a bigger share of profits, stoking concerns of supply disruptions this year.Copper rallied to a three-week high on Thursday on growing optimism on the world economic recovery, adding to the red metal’s impressive recovery of 90% so far this year.Copper for December delivery HGZ9 surged 11.90 cents, or 4.3%, to settle at $2.8985 a lb on the New York Mercantile Exchange’s COMEX division, close to its session high at $2.9010 -- its loftiest level since Sept. 18.Workers at the mine are scheduled to start voting on Thursday, said the union source, adding that the process could take up to four days as workers cast their ballots while working different shifts."Happily we were able to reach an agreement that substantially improves our contract and saves the company a lot of drama," said the union source, who was traveling to the open pit mine located in Chile’s copper-rich Atacama desert.A Billiton spokesman was not immediately available to comment on the news.Billiton has a majority stake in Escondida, which produced 1.25 million tonnes of copper in 2008 or 5 percent of the world’s total copper output. Still, the mine has seen its output stagnate since 2005 on labor strife, lower ore grades and operational problems.Escondida’s production dropped over 30% in the first-quarter on poor ore grades and weaker milling operations.Other stakeholders at Escondida include Rio Tinto (RIO.AX: Quote) (RIO.L: Quote) holds 30 percent and Mitsubishi Corp (8058.T: Quote) 10 percent.For data on the world’s copper output (Reporting by Alonso Soto; Editing by David Gregorio)


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