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‘Warning’ strike at copper giant Codelco sparks fear of supply disruptions

A miner wrapped in a Chilean flag shouts slogans as he joins other strikers outside El Teniente copper mine near Rancagua city, about 100 kilometres south of Santiago, April 9, 2013. Workers said the one-day strike was a “warning.”

IVAN ALVARADO/REUTERS

A one-day strike at state copper miner Codelco of Chile may mark just the beginning of supply disruptions in a country producing about a third of the world's copper.

Union workers at Codelco, which operates seven mines and expects to produce about 1.7 million tonnes of copper in 2013, launched the 24-hour strike on Tuesday with demands for better working conditions and pensions and an end to the use of sub-contractors.

While largely symbolic, the strike coincides with the CRU/CESCO week in Santiago, one of the world's largest mining conferences dedicated to the copper industry.

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Chile is the world's largest copper producer. It is also host to such global mining giants as BHP Billiton Ltd., Anglo American PLC and Canada's Teck Resources Ltd. It is a chief supplier to No. 1 consumer China.

Codelco alone supplies more than 10 per cent of annual global supply.

The strike comes also as candidates launch presidential campaigns for elections in November, when Chile's left will try to wrest power back from the right after conservative president Sebastian Pinera in 2010 ended 20 years of leftist rule.

"If there is no political will to provide concrete answers to these demands within a prudent amount of time, we will continue with our mobilizations, which will escalate over time," the Federation of Copper Workers said in a statement to launch the strike.

Copper prices had their biggest gains since January on global markets on Tuesday, boosted by news of the Chilean labour unrest – which media said led to a complete freeze in production at Codelco – as well as signs for potential demand growth in China.

Workers are also demanding that all the copper produced in Chile – close to six million tonnes – be smelted and refined domestically rather than exported in raw concentrates form, so that more revenue from the red metal stays in the country.

Chile's mineral wealth, driven by copper, is credited with helping to make the south Andean country one of Latin America's most affluent, and has been a critical issue in elections since it returned to democracy in 1990 with an end to the dictatorship of Augusto Pinochet.

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This year, elections occur in the midst of a wave of resource nationalism that has travelled the globe as communities in countries rich and poor demand more benefits from the resources mined from their lands.

"The illegal strike by Codelco workers today is not justified," Codelco executive president Thomas Keller said in a press statement of the 24-hour strike that workers described as a "warning."

"It means that the country, that Chileans, will lose $35-million in earnings," said Mr. Keller, who expected to recover the production lost to the strike.

Separately, Mr. Keller told Reuters in an interview on Tuesday that Codelco, which produces close to 5,000 tonnes of copper per day, would have record production this year as output from new mines helped it beat a previous high of 1.796 million tonnes mined in 2011.

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About the Author
Mining Reporter

Pav Jordan is a mining reporter for the Report on Business. More

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