World’s Top Copper Mine Shut as Union Set for Long Standoff

  • Workers building campsite designed to last at least two months
  • Strike at Escondida copper mine in Chile began Thursday

The head of the union at the world’s biggest copper mine says he’s never seen owner BHP Billiton Ltd. this reluctant to cede ground over wages. That’s why he’s preparing for a long strike.

Patricio Tapia, the president of Escondida’s main union, is overseeing construction of a workers’ camp outside the mine that’s designed to last at least two months. He spoke in an interview Thursday, hours after the union’s 2,500 members downed tools following the failure of a month-long negotiation.

Patricio Tapia

Photographer: Laura Millan Lombrana/Bloomberg

Tapia, a second-generation miner who says he became a union director by chance when colleagues nominated him to fill a vacancy, was elected president in 2013. Before that he worked as an electrician for 23 years at Escondida, in Chile’s Atacama Desert. He’s been involved in three wage negotiations at the mine, where a 25-day strike in 2006 was Chile’s longest in at least a decade.

“We’ve never seen the company in this position,” Tapia said. “This is a dialogue of the deaf.”

While workers are emboldened by a 30 percent rally in copper prices in the past year, BHP is under pressure to keep costs in check as commodity markets recover from the biggest downturn in a generation. The dispute is being keenly watched by unions and management at other mines whose contracts are coming up for renewal. With the market tightening, investors are also paying close attention to possible supply disruptions.

The Escondida shutdown comes as exports are halted from Freeport McMoRan Inc.’s Grasberg mine in Indonesia, threatening supplies just as prices recover to the highest level since June 2015. Goldman Sachs Group Inc. said the two mines are set to produce almost 9 percent of global mine supply this year and the disruptions may coincide with stronger demand from China to drive prices higher in the second quarter.

Three-month futures on the London Metal Exchange closed at $5,991 a metric ton on Jan. 31 ahead of the strike and traded at $5,873 by 6:04 a.m. in London on Friday.

BHP declined requests for comment. In a statement Wednesday, Escondida said it always strives to reach a consensus but that wasn’t possible at this stage.

Tapia is well aware of what’s at stake as the union prepares for a protracted work stoppage. As he spoke, union members were erecting a kitchen and dining room and installing toilets and showers at the camp, which will hold as many as 1,200 in any given time.

“This is neither good for the union, nor the company,” Tapia said. “But it is our only alternative in front of a rival that does not want to talk. Our only strength is the strike.”

Miner’s Son

The union, which represents 95 percent of Escondida’s operators and maintenance workers, has requested that BHP evacuate about 1,700 contractors working at the mine. While Chile’s labor authorities had determined that 80 workers are needed to provide minimum services at the mine, the union said it only allowed 10 workers in this morning.

Workers will meet twice a day at the camp to discuss any news about negotiations. Tapia said he couldn’t reveal what other actions the union will be taking to protest.

“Our people are confident that we have a strategic plan that will not affect the security of the mine and our members’ security,” he said.

Escondida workers set up camp at mine entrance as strike begins.

Photographer: Laura Millan Lombrana/Bloomberg

As the son of a saltpeter miner and born in an Atacama saltpeter community, Tapia hasn’t known life outside the mines. He remembers when workers’ protests were simpler.

“There was a sort of brotherhood -- families lived together taking care of each other,” he said. “Protesting was a matter of holding your fist in the air and hoping for the best.”

Today, he said, union leaders must be aware of labor regulations and reforms. Escondida’s union periodically conducts its own research on worker productivity to be able to counteract the company’s position in wage negotiations.

Around him, workers at the camp start cooking lunch in tents that afford some shelter from the strong desert sun. Someone connects a phone to a speaker and music blasts out.

“About time!” they shout as they laugh.

“See? We are ready for everything,” Tapia said.

— With assistance by Philip Sanders

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