Workers from BHP's Escondida copper mine, in Antofagasta, Chile, on Aug. 15.Cristian Rudolffi/Reuters
The main union at BHP’s Escondida copper mine in Chile agreed to management’s sweetened wage offer on Friday, leading the union to suspend its strike and easing concerns about global supplies of the metal.
The union, which represents about 2,400 workers, began striking on Tuesday at Escondida, the world’s largest copper mine, after failing to reach a deal over pay. The strike had started to push up global copper prices.
But on Friday, BHP said the two sides reached an agreement after resuming talks. Sources at the company and the union told Reuters that BHP offered workers around $32,000 as a bonus and an additional $2,000 in soft loans.
BHP had previously offered a $28,900 bonus per worker, compared with the union’s demand of 1% of shareholder dividends from the mine, or roughly $35,000 to $36,000 per member.
“BHP and Union No. 1 have come to an agreement for a collective contract proposal. Along with that, it was agreed to suspend the strike,” BHP said.
In a statement, the union said the contract offer had overwhelming support from its members and the deal would be signed.
“I feel this is the greatest recent union victory in terms of results,” said Marco Lopez, a lawyer for the union.
“Not just because of the economic part, but substantial improvements in historic demands we hadn’t been able to achieve (before).”
Andres Gonzalez, head of mining analysis at Plusmining consultancy in Santiago, said the deal could have an impact beyond Escondida.
“The large sums in this negotiation could mark a precedent not just for Escondida, but for all of Chile’s mining industry,” Gonzalez said, adding that the industry will have to think strategically about how to conduct future negotiations.
Gonzalez said, however, that the strike’s suspension was a good sign not just for global markets, but also for Chile’s economy since Escondida represents about 3% of the country’s GDP and around 5% of the world’s copper supply.
Copper prices initially fell after the news before recovering and were up 0.3% at $9,177.5 per metric ton after hitting a session low of $9,047. The metal, used in power and construction, headed to its first weekly gain in six weeks – of 3.5% – as the strike had sparked concerns about supply disruptions.