Bloomberg News

BHP Billiton Coal Miners Resume Strike After Pay Talks Fail

September 12, 2011

(Updates with closing share price in sixth paragraph.)

Sept. 12 (Bloomberg) -- BHP Billiton Ltd.’s coking coal miners in Australia went back on strike after failing to agree on pay and work conditions with management, further disrupting operations at the largest exporter of the steelmaking material.

“Strikes are continuing and now we are considering an escalation,” Stephen Smyth, a division president at the Construction, Forestry, Mining and Energy Union in Queensland, said in a phone interview yesterday.

Stoppages that disrupted operations at the three BHP Billiton Mitsubishi Alliance mines on Sept. 10 will continue until at least tomorrow, Smyth said. The action may be extended to BMA’s four other mines, pending a member vote later this week, he said.

About 3,500 coal miners have taken part in rolling work stoppages that began in June, the first in a decade at BHP’s Australian coal mines, after they rejected BHP’s initial offer for a new contract. The Melbourne-based company said it will allow all workers at the mines to vote on its proposals at a meeting at the end of September.

“We have reached an impasse in negotiations,” after a meeting with unionists on Sept. 10 failed to reach an agreement, BHP spokeswoman Samantha Stevens said in an e-mailed statement yesterday. “We are keen for employees to take the time in the coming weeks to review and understand the agreement in detail, before the end-of-September ballot.”

BHP fell 3.9 percent to A$36.45 at the 4:10 p.m. close on the Australian stock exchange, reaching its lowest closing price since May last year. The benchmark stock index fell 3.7 percent.

Prices, Profits

Labor unions globally are stepping up demands for higher wages and improved conditions as surging commodity prices swell profits at mining companies including BHP. About 1,200 workers at Freeport-McMoRan Copper & Gold Inc.’s Peruvian copper mine last week began the first of a series of strikes planned over pay increases. More stoppages are planned if no agreement with management is reached this week, union official Leoncio Amudia said Sept. 9.

BMA is equally owned by BHP and Mitsubishi Development Pty. It directly employs more than 4,800 people, according to its website. Almost all the coal mined at the BMA sites, with annual capacity of 58 million metric tons, is shipped overseas for steel production, it said.

Lower Output

BMA’s initial offer for the workers for a 5 percent pay rise in addition to a A$5,000 ($5,193) bonus was rejected in June, when they began the industrial action. A full-day strike may cut output by 130,000 metric tons a day from the mines, Melinda Moore, an analyst at Credit Suisse Group AG, said in a June 27 report. She also said protracted strikes could sustain current price levels.

Steelmaking-coal prices rose 47 percent to a record $330 a metric ton for three-month contracts starting April 1 after heavy rain and flooding in Australia shut mines. In June, Asian steelmakers agreed to pay Anglo American Plc $315 a ton for the September quarter, according to UBS AG.

The strikes have had a “modest impact” on production, BHP Chief Executive Officer Marius Kloppers said last month.

“BHP believes it’s negotiated enough and further talks won’t assist,” the CFMEU’s Smyth said yesterday. “Negotiations should be alive and active. BHP is setting itself up to roll out an agreement that it will present to workers that the union doesn’t support in any shape or form.”

--Editors: Paul Tighe, Brendan Murray

To contact the reporters on this story: Jason Scott in Perth at jscott14@bloomberg.net; Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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