Strike action at the world’s largest copper mine looks set to enter a third week after workers at the Escondida facility in Chile rejected an improved pay offer from BHP Billiton.
The company said that talks with union leaders at Escondida over the weekend had been “positive” but there appeared to be no immediate end in sight this morning, with unions demanding a 10 per cent hike in wages and BHP willing a 4 per cent increase.
Negotiations continued today ahead of a formal vote. The strike will enter its fifteenth day tomorrow and the law will then allow Escondida to negotiate individually with workers.
The action, which began on August 7, was sparked when miners demanded improved pay on the back of soaring prices for the red metal.
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Production at the plant, which produced more than 8 per cent of the world’s copper last year, has been cut by up to 60 per cent by the strike and was suspended entirely on Saturday.
The industrial action has added more upward pressure on prices and copper for delivery in three months gained $170 to $7,620 a tonne in London this afternoon. Prices have more than doubled in the past year as demand from China has soared.
It is estimated that the disruption is costing Escondida’s owners, which also include Rio Tinto Group and Japan’s Mitsubishi, $16 million in profits a day.
The disruption comes at a sensitive time for BHP, which is expected to report record full-year profits of more than $10 billion later this week, up from $6.2 billion last year.
The Times reported this morning that the mining group is also expected to announce a $3 billion (£1.6bn) share buyback, its second this year, to take advantage of bullish commodity markets.
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BHP carried out a $2 billion buyback earlier this year.
The union coordinating the strike action has lowered its pay increase demand to 10 per cent from 13 per cent last week.
BHP has offered two pay options, both of which were rejected over the weekend.
The first is a four-year contract, providing for a 4 per cent pay hike in the first three years and another 1.3 per cent in the fourth year. It also includes soft loans and bonuses of around $32,000 for each worker.
The second offer is a three-year contract which gives a 4 per cent salary increase, excluding bonuses and concessional loans of around $23,500 a worker.
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On Friday, BHP said it was considering legal action against union workers who had blocked all access roads to Escondida, forcing the temporary closure of the plant.
Shares in BHP Billiton were up 7p at 1,093p in morning deals in London. To track the stock click here.