Escondida Cu mine union rejects offer, votes for strike

The main labour union representing workers at mining firm BHP's Escondida copper mine announced its members have voted to strike after rejecting the company's contract offer.

Chile's labour ministry has now launched a mediation period aimed at forestalling a strike.

Union No. 1 said 2,164 of its members voted in favour of labour action with 11 votes in favour of BHP's contract offer.

"We hope this strong vote will be the decisive wake-up call for BHP to initiate substantive talks to reach satisfactory agreements if it wants to avoid an extensive conflict, which could be the most costly in the country's union history," the union said.

As the risk of a strike escalates at Escondida, the world's largest copper mine, investors will monitor the situation for any indication on potential impacts to global supply.

Prolonged labour action at the mine could have an impact on supply-side fundamentals, providing further upward support to already high copper prices.

Prices were little changed today from 28 July when the union first urged its members to reject BHP's offer and vote in favour of a strike.

The three-month copper contract on the London Metal Exchange settled at $9,767/t in today's official morning session, from $9,719/t on 28 July.

Negotiations did not make enough progress on its key demands, the union said. Another sticking point was the proposed distribution of 1pc of the dividends paid to investors equally among all workers.

BHP did not provide a comment at this time.

Escondida produced 1.18mn t of copper in 2020 and 426,700t in the first five months of 2021.

By Corey Aunger and Patricia Garip