Bloomberg News

BHP’s Escondida Workers Strike as Coal Miners Down Tools

July 22, 2011

(Adds comment from union official in fourth paragraph, copper prices in sixth paragraph.)

July 22 (Bloomberg) -- Workers at BHP Billiton Ltd.’s Escondida copper mine, the world’s biggest, began striking as coal miners at the company’s Australian operations prepared to escalate industrial action.

The strike by all union members at the northern Chilean mine began at 8 p.m. New York time yesterday and will run through 8 p.m. today, which may lead to about 3,000 metric tons of lost copper production, union leader Jose Vidal said by telephone. The union may prolong the strike if talks with management fail, he said.

Labor unions are stepping up demands for higher wages and improved conditions as surging commodity prices swell profits at mining companies including Melbourne-based BHP. The strike at Escondida follows a one-day stoppage by union members at Codelco, Chile’s state-owned copper producer, on July 11 to protest planned job cuts as management revamps century-old mines.

“We are going to define our strategy” later today, Vidal said. Workers had some informal talks with management, he said.

The Escondida strike took place after workers failed to agree with the company over bonuses linked to production, Vidal said. BHP owns 57.5 percent of Escondida and its share of output in the year through June was 390,500 tons. Smaller rival Rio Tinto Group owns 30 percent.

Copper Prices

Copper futures for September delivery rose 2.65 cents, or 0.6 percent, to close at $4.41 a pound at 1 p.m. on the Comex in New York. BHP declined 0.3 percent to close at A$43.43 in Sydney trading.

Chile is the world’s biggest source of copper. Futures have more than doubled since 2008 as global consumption outpaced mine output.

In Australia’s Queensland state, workers at the BHP Billiton Mitsubishi Alliance-owned Saraji mine will hold 12-hour stoppages this weekend, said Stephen Smyth, a division president at the Construction, Forestry, Mining and Energy Union. Miners will stop work for 36 hours on July 27 at the Norwich Park mine, followed by stoppages at six other mines, he said.

Higher Prices

The strikes in Australia, the world’s largest coal exporter, may bolster prices already driven higher by supply shortages following floods in the state. The last stoppage by the coal workers was for 18 hours at the Gregory mine on July 17, Smyth said by phone from Queensland.

“We’ve increased our action and we want to put more pressure on the company,” he said. “We’ve made only very little progress at the last meetings so we’re extending negotiations until August.”

BHP this week reported a 13 percent drop in full-year coking coal output following floods in Queensland.

“We continue to negotiate with the unions and we believe progress is being made,” in Queensland, BHP spokeswoman Samantha Stevens said by phone from Melbourne today. “We would again stress that further industrial action at this time won’t be in the best interest of finalizing an agreement.”

She declined to comment on the impact of the strikes in Queensland or Chile.

About 3,500 coal miners in Queensland took part in several work stoppages that began last month, BHP’s first at its Australian coal mines since 2001. The workers are seeking changes to employment contract in matters relating to job security, recruitment, use of contractors, training and development, Smyth said.

--Editors: Jessica Brice, Robin Saponar

To contact the reporters on this story: Matthew Craze in Santiago at mcraze@bloomberg.net; Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net; Rebecca Keenan at rkeenan5@bloomberg.net


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