Escondida mine strike ups labour risks in Chile

A strike at Chile's giant Escondida copper mine that took the industry by storm and rattled global markets, threatens to usher in a new era of more labour turbulence in the world's top producer. The stoppage entered its eighth day on Friday with workers and owner BHP Billiton at odds over a bonus that hampered early hopes of a deal to end the conflict, which has choked output at the world's top deposit. Known as a paradise of stability for mining companies facing growing political risk elsewhere, Chile is now dealing with more aggressive worker unions emboldened by lofty copper prices and growing social unrest at home. Mining workers all the way from South Africa to Australia and Indonesia demand a bigger piece of the commodity price bonanza in growing labour agitation that could hit the earnings of global giants such as BHP, Xstrata and Anglo American. Article continues below The Escondida stoppage marked a rare precedent in which workers ignored Chile's strict labour laws that forbid strikes outside of the collective contract talks period. Union workers took advantage of protests by students and workers at state copper giant Codelco against President Sebastian Pinera to push for bonus demands of their own. The stoppage, which BHP says is illegal, is watched closely by other unions that see it as a new strategy and executives worried the action could spread like wild fire. Aggressive strategies "Executives are getting restless. They are calling unions to seek early wage talks to prevent contagion," said Miguel Barraza, a union leader with the El Abra mine, majority owned by Freeport McMoran. "The labour code has always benefited the companies, but now things will have to change." Juan Carlos Guajardo, head of the Santiago-based copper think tank CESCO, said private mine unions are now more likely to opt for aggressive strategies to wrest benefits and seek the political prominence of their state sector colleagues. Strikes could become more unpredictable if unions mimic Escondida's workers, leaving firms with little time to prepare and stock up material ahead of a lengthy conflict. Escondida was forced to halt concentrate sales six days into the strike. "Chile had few strikes and all within the wage talks period. But the Escondida [strike] sets a new period in which we will see more difficult labour issues," he said. The strike at Escondida, which Barclays says has so far trimmed 17,500 tonnes from global supply, has kept limited upward pressure on copper prices that remain volatile on fears over the health of the global economy. Contagion fears The risk of immediate solidarity strikes by Codelco and the world's No.3 mine Collahuasi eased as unions there seek talks with management, union officials said. Contagion of labour unrest in Chile could compromise about a third of the world's mined copper. President Pinera, a conservative who took office last year, agreed to sit down with Codelco unions this week for the first time to ease tensions following a 24-hour stoppage on July 11 that cost Codelco about $41 million (Dh150.58 million) in lost revenue. Escondida strikers on Friday snubbed a new compensation offer by BHP, which initially raised hopes of a deal. BHP is taking a hard stance by not raising the bonus. Industry players fear that if BHP agrees to worker demand for a higher bonus, it would set another bad precedent that again raises the risk of rapid contagion at other mines.