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Chile crosses fingers after labor unrest; agreement between BHP, Escondida

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SAO PAULO, Brazil: Last year was definitely the Chilean copper industry would just as soon forget

In the first half of 2009, local producers struggled to deal with prices that had plunged on the back of the worldwide economic crisis. Fortunately, they managed to cut costs and increase production during those first few months.

But just when everything seemed to be heading in a more positive direction, workers balked in several contract negotiations, resulting in strikes and a surplus of tension in both Chile and the international copper market.

The year ended in a dramatic and emblematic way when workers at Chuquicamata—the largest mine operated by the world's largest producer, state-owned Corporación Nacional del Cobre de Chile (Codelco)—decided to lay down their tools in support of demands for higher wages.

Earlier, workers at BHP Billiton's Spence copper mine and Xstrata Copper's Altonorte copper and molybdenum smelter also went on strike for better wages and benefits. The worst situation was at Spence, where workers downed tools Oct. 13 and didn't resume activities until the end of November, after weeks of mounting tension, protests and blockades of access roads to the mine.

But BHP managed to avert potential strikes at the Cerro Colorado Mine and, most important, at the world's largest copper mine, Minera Escondida, where workers got a 5-percent wage increase and 14.5 million pesos ($29,500) in bonuses and benefits, an amount considered extremely high in Chile.

When the deal was sealed in October, many argued it would set dangerous precedents for negotiations scheduled to follow elsewhere in the country. Juan Carlos Guajardo, general manager of Chilean copper study group Centro de Estudios del Cobre y la Minerí­a, was quoted as saying in local news reports that the high bonus and benefits at Escondida was going to make things more difficult for other companies, especially Codelco. His prediction proved correct when workers at Codelco Andina rejected an early company offer of bonuses and benefits of 9.3 million pesos ($18,900) plus a 3-percent wage increase.

Codelco settled with Andina workers at the end of October, but a few days later workers at Chuquicamata staged a one-day strike and at the end of December voted to go on strike indefinitely, rejecting a 3.8-percent wage rise and 11.5 million pesos ($23,400) in bonuses. Two days later, the workers accepted a revised offer calling for a 4-percent wage increase and 12.14 million pesos ($24,700) in bonuses and an optional loan of 3 million pesos ($6,100).

Compared with the tension-filled final months of 2009, this year is expected to be a pleasant change—although uncertainties remain.

The next major collective bargaining agreements set to expire in Chile's copper sector are those in effect at Codelco's Radomiro Tomic copper mine, which produced some 300,000 tonnes in 2008, and at Collahuasi, the country's third-largest copper mine. Owned by Xstrata and Anglo American Plc, Collahuasi produced 464,000 tonnes in 2008. Both contracts are scheduled to run through Nov. 30.

"In the last negotiations, in 2007, wages rose 3.5 percent, but it is still too early to estimate a percentage for this year," Ricardo Flores Iriarte, secretary of the Radomiro Tomic union, told AMM. "But, yes, the Chuquicamata deal will be a reference for us, although the operations are different."

Manuel Octavio Muñoz Barrientos, president of the Collahuasi union, said that workers received a 4-percent wage increase in 2007 after tense negotiations and a strike that lasted a few days.

"It is still early to make forecasts, but we can say that the company recorded very strong results in 2007 and 2008 and we will want part of that," the union leader said.

Pedro Marín, president of the Chilean mining workers' federation, rejected charges that workers were stubborn last year, and said that negotiations in 2010 would possibly be better. "The miners reported very high revenues in the past few years, and workers demanded only 2 to 3 percent of their net profits; is that too much?" he asked.

That question won't be fully answered until the end of this year, by which Codelco, Xstrata and Anglo American hope to have reached agreements with their workers without causing — or being on the receiving end — of too much pain and with all parties at least minimally satisfied.
JUAN WEIK


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