Codelco Halts Mine After Accident as Strike Looms at Another

  • Two dead at Chuquicamata after vehicle crash at the mine
  • Workers at El Salvador vote whether to go on strike on Sept.3

Codelco, the Chilean copper giant grappling to raise money to overhaul its aging mines, halted one of its operations on Tuesday after a fatal accident and faces the possibility of a strike at another.

A vehicle crash at the Chuquicamata open pit left two dead, leading the state-owned company to suspend work, Codelco said in a statement. It’s evaluating when it can reopen, a company official said. At the smaller El Salvador mine, workers are voting on whether to accept a two-year pay offer or got on strike.

The potential impact on output is coming at a bad time for Codelco after it reported a first-half net loss last week and Chief Executive Officer Nelson Pizarro described the miner’s situation as “extraordinarily fragile” as copper prices slump and years of under-investment mean it needs to spend a record amount just to maintain production levels. 

“We understand Codelco’s situation, but we are not responsible for it,” Patricio Elgueta, president of Potrerillos Union II at the Salvador mine, said by telephone Tuesday. “Over the past few weeks Codelco has been building up the rhetoric about how the company has no money. This is all a communications campaign.”

Presenting half-year results last week, Pizarro said that while Salvador needs investments, “we have to make an effort so we can survive this time without generating losses.”

Codelco’s bonds have lost 0.7 percent this month on average, putting them among the worst performers of mining and metal notes globally, according to data compiled by Bloomberg. The peer group has gained 1.9 percent in the same period.

Copper is the only major metal to post price declines this year as warehouse stockpiles build amid slowing Chinese demand. The metal rose as much as 0.5 percent to $4,628 a metric ton on the London Metal Exchange and traded at $4,625 at 11:46 a.m. in Singapore.

The 1,130 workers at El Salvador, Codelco’s smallest mine, have been offered wage increases in line with inflation and a bonus of about $3,700 over two years. A vote to reject the offer would lead to a strike starting Sept. 3.

“The trend so far is that workers are rejecting Codelco’s proposal,” said Elgueta. Voting results probably will be announced Wednesday night, he said.

In a separate incident Tuesday, one worker died and three others were injured at the Freeport-McMoRan Inc.-operated El Abra mine, in which Codelco owns a 49 percent stake.

Before it's here, it's on the Bloomberg Terminal.