SMM8 28: at a time of falling copper prices, copper producers are willing to pay higher wages, almost eliminating the risk of supply shocks caused by labor disputes.
The threat of prolonged shutdowns at some of the world's largest mines in a record year of labour negotiations in Chile has held back copper bears. But most of the 32 contracts that expired this year have been renewed and there has been only one major strike. Freeport- McMoRan Inc., the second largest Peruvian producer A new contract was signed at Cerro Verde last month.
In a written response to a reporter's question, Diego Hernandez (Diego Hernandez), chairman of the Chilean Mining Association Sonami, said, "the risk of labor conflict in the industry has been greatly reduced. The rest of the negotiations are of little significance and the suspension will not affect Peru's 2018 production target.
Copper mines negotiated with Chile this year account for about 3/4 of the country's copper production. Agreements reached so far include BHP Billiton (BHP Billiton Ltd.) Its Escondida and Codelco's El Teniente copper mine. Escondida is the largest copper mine in the world. Chile is expected to produce 5.76 million tons this year, an increase of 4.7 per cent over 2017. "the risk of supply disruptions in the labor sector has completely disappeared," Cesar Perez-Novoa, an analyst at BTG Pactual, said by telephone.
Trade disputes between the US and China have escalated, and while copper prices have fallen, companies have raised wages and paid some of the highest bonuses in years. BHP Billiton agreed to pay a total bonus of about $60 million at Escondida. Antofagasta Plc paid a similar salary to each employee at Los Pelambres to keep a record of no strikes. Rommel Arenas, the leader of Peru's Cerro Verde trade union, said by telephone Friday that Cerro Verde, workers had signed a three-year contract, including real wages and bonuses, that reduced their working hours and raised their wages by an average of 10 per cent. , Cerro Verde workers went on strike for three weeks in 2017 after unions demanded family medical assistance, leave and an assessment of the company's targets for calculating workers' share of profits.
To be sure, there is still a risk of interference in labour disputes outside the collective bargaining process and from other sources. In Chile, the Water Authority is preparing to limit the new rights of Atacama Salt Beach. Atacama Salt Beach is a key source of water for the Zaldivar mines in Escondida and Antofagasta. Proposals to strengthen glacier protection rules could affect Codelco and Anglo American mine expansion projects. In Peru, community protests over the past week have blocked access to MMG Co., Ltd.'s Las Bambas copper mine. Las Bonbus is the third largest copper mine in Peru. Last year, supplies at the mine were disrupted three times, and five people have been killed in protests since 2015.