Escondida Main Union Approves New Three-Year Contract, Planned Strike Canceled [SMM Analysis]

Chile's labor authority announced on October 14 local time that BHP's Escondida copper mine and the Sindicato N°2 de Supervisores y Staff union, representing supervisors and staff, reached a collective contract agreement following mediation. The union represents approximately 1,020 supervisors and staff, and the new proposal received about 64% approval in the vote, concluding the 2026 collective bargaining process and canceling the planned strike.

BHP stated that the new contract is valid for 36 months, improving fixed and variable compensation and existing benefits, while adding new bonuses and other terms. According to foreign media reports, the negotiated package amounts to 30 million Chilean pesos per person, including a 3 million Chilean peso low-interest loan. In addition, the contract includes a 1.5 million Chilean peso holiday bonus and increases transportation, meal, and night shift allowances as well as production efficiency-related bonuses. Major bonuses and allowances will be adjusted semi-annually according to the consumer price index.

Previously, the union rejected the company's contract proposal on September 30, with about 95% of participating members voting in favor of a strike. On October 13, the union announced it would begin a strike on the first shift the following day, but the two sides subsequently continued final-stage negotiations and agreed to extend mediation by one day to allow time for member voting and contract formalization, ultimately reaching an agreement before the strike began.

Escondida is the world's largest copper mine. According to BHP's disclosure, in fiscal year 2026 ended June 30, 2026, the mine's copper production on a 100% basis was 1.2612 million mt, including 1.0468 million mt of payable copper in concentrates and 214,400 mt of copper cathode. Copper production guidance for fiscal year 2027 is 1 million to 1.1 million mt. This agreement eliminates the risk of short-term production disruption from the supervisors' union strike and helps ease market concerns about supply interruptions at Escondida.