BHP Dodges Chile Copper Strike With Eleventh-Hour Wage Deal

BHP Dodges Chile Copper Strike With Eleventh-Hour Wage Deal

BHP Group averted a strike at its second-largest copper mine in Chile after workers at the Spence operation accepted a final wage offer on the last day of mediated talks.

The deal will ease concerns over a potential stoppage that would have further tightened global supplies of the metal. It comes after staff at a BHP operations center in Santiago ended a strike and returned to work this week. Attention will now shift to wage talks at BHP’s giant Escondida mine.

About 92% of the 1,079 Spence operations and maintenance staff who voted accepted terms of the new three-year contract, according to a document provided by the union. Workers had rejected a previous proposal and BHP sought mediation that was extended through Thursday.

“In these times, the deal we reached is an important signal of how we should face Spence’s current and future challenges,” said Ana Zuniga, a spokesperson for BHP’s Pampa Norte, which comprises Spence and the Cerro Colorado mines.

Workers are “calm and glad” with a package that includes a 2% wage increase and a 15.5 million-peso ($21,600) bonus, as well as new benefits and other adjustments, Union President Ronald Salcedo said.

MORE: BHP Miners Want a Share of Copper Windfall in Chile Wage Talks

Surging copper prices and company profits are emboldening unions whose members have continued to work through the pandemic. On the other side, producers are looking to contain labor costs as inflation picks up, ore quality deteriorates and and host nations look for a bigger share of the windfall.

Still, the wage deal at Spence may bode well for collective bargaining that just kicked off at Escondida, the world’s largest copper mine that endured a 44-day strike in 2017. Wage talks in the top copper-producing nation add to supply risks at a time when recovering demand is tightening the global market.

BHP recently invested about $2.5 billion in upgrades at Spence, including a new concentrator, with the Pampa Norte division expected to produce 240,000-270,000 tons in fiscal year 2021, compared with 243,000 tons last year.

©2021 Bloomberg L.P.