(Bloomberg) -- Workers at BHP Group’s Escondida mine in Chile will begin a strike Tuesday after failing to reach a wage agreement, setting the stage for a stoppage at the world’s biggest copper operation.
The union’s 2,400 members will down tools at 8 a.m. Chile time after rejecting BHP’s proposal for a new three-year labor contract following five days of mediated talks, the union said in a statement.
The action will halt an operation that accounts for about five per cent of all the world’s mined copper, disrupting shipments for Melbourne-based BHP, while potentially easing pressure on copper futures that have slumped in recent months along with dimming prospects for the global economy.
Escondida churns out more than 1 million metric tons a year, making it by far the biggest supplier of copper. Some analysts see BHP Group overtaking Codelco this year as the top global copper producer.
While collective bargaining in Chile is often marked by brinkmanship and last-minute agreements, Escondida has been the scene of lengthy stoppages in the past, including a 44-day strike in 2017.
BHP didn’t immediately provide a comment.
Benchmark copper traded in London surged to record levels in May as bullish investors placed bets on shortages. That emboldened unions seeking a share of the windfall for their members. But prices have since pulled back by roughly 19 per cent, undermining some of that leverage as companies look to avoid big increases in fixed costs in a cyclical and capital-intensive business.
Still, negotiations come at a time of global tightness of copper concentrate — the raw material produced at Escondida and used to feed smelters — even though the market for refined metal is well supplied for now.
On the final day of mediated talks, BHP had offered a signing bonus of 27 million pesos (US$28,900) per worker, as well as improvements in benefits. Workers had sought a bonus of more than 30 million pesos and a share of profit.
With assistance from Matthew Malinowski
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