Chile Forum

Codelco's Contract Workers Strike, Blockade Mines (Update5)

By Heather Walsh

June 25 (Bloomberg) -- Contract workers at Codelco, the world's biggest copper producer, began a strike at the company's mines in Chile as part of a dispute over wages.

Workers slowed output at three copper mines after protesters used burning tires and buses to block roads that police later cleared, said Codelco's press office in Santiago. Police arrested 68 workers, said the Confederation of Copper Workers, which organized the strike. The group said blockades remain in place.

``We will do this as long as necessary,'' Cristian Cuevas, the confederation's president, said today in a phone interview from central Chile. ``We can last quite some time.''

Workers in Chile, the world's largest copper supplier, and in neighboring Peru are pressing for higher wages after the price of the metal almost tripled in three years. Copper futures in New York have jumped 18 percent this year.

Peruvian unions at two mines and a smelter owned by Southern Copper Corp., the world's fifth-largest producer of the metal, went on strike on June 23. A union at Collahuasi, Chile's third-largest mine, said it expects to vote this week to strike next month.

Copper futures for September delivery rose 1.45 cents, or 0.4 percent, to $3.398 a pound on the Comex division of the New York Mercantile Exchange.

Property Damage

About 28,000 contract workers are taking part in the Codelco strike, Cuevas said. Codelco, which is owned by the Chilean government, said in a statement today on its Web site that a small number of workers participated in the protests.

The company will take legal action against those responsible for property damage after protesters burned vehicles outside El Teniente, Codelco's second-largest mine, government spokesman Ricardo Lagos Weber said in comments broadcast by Chilean television station Canal13.

The protest slowed production at Codelco's Salvador mine, its smallest, and at its El Teniente and Andina mines, Codelco's press office said. Two other copper mines and the Ventanas smelter were producing at pre-strike levels, the office said. Santiago-based Codelco produces 10 percent of the world's copper.

Output also fell at the company's Ventanas smelter because striking contractors' employees run part of the machinery, Luis Guerra, president of Codelco's largest union at the division, said by phone from central Chile. The company's Andina unit had to halt production, said Sergio Flores, president of one of two Codelco miners' unions at Andina.

Mining Halted

The company's El Salvador division halted copper mining, though a nearby smelter is running normally, Egidio Masias, president of the division's largest miners' union, said in a telephone interview today from northern Chile.

The El Teniente, Andina and El Salvador divisions accounted for 25 percent, 14 percent, and 4.8 percent, respectively, of Codelco's 1.676 million metric tons of production at fully owned mines last year. Codelco's largest division accounted for the remainder of the output. Codelco also owns 49 percent of the El Abra copper mine in Chile, which added 107,000 tons to output last year.

Contract workers at Codelco build infrastructure, repair machinery, clear rock and provide food and transport services. The workers, who are employees of contractors hired by Codelco, are seeking wages and bonuses closer to those of Codelco's own employees, Cuevas said.

Codelco said it had 30,300 contract workers as of February, compared with about 17,300 regular employees.

A walkout by contract workers in January 2006 at two Codelco mines increased global copper prices even as the company said production was unaffected.

To contact the reporter on this story: Heather Walsh in Santiago at hlwalsh@bloomberg.net

http://www.bloomberg.com/apps/news?pid= ... ommodities

Miners at Chile's Collahuasi strike, copper firms
By Gideon Long | July 9, 2007

SANTIAGO (Reuters) - Hundreds of workers at one of Chile's largest copper mines went on strike on Monday, triggering a spike in the price of copper on international markets at a time of tight global inventories.

Workers at Collahuasi, which accounts for around 8 percent of Chile's total copper production, walked out after their union and management failed to agree a deal on pay and conditions.

Management at the mine, which is majority-owned by industry heavyweights Xstrata Plc <XTA.L> and Anglo American <AAL.L>, said they had a contingency plan in place and output was unaffected.

But the president of the 698-member union said the work force had been decimated and production had been hit.

"Staff levels at the mine are down to 10 percent," Union President Hernan Farias told Reuters late on Monday, adding that there had been no contact between the union and management since talks broke down on Friday.

Citing a source inside the Collahuasi plant, he said only six out of 60 giant dumper trucks used to transport mineral around the mine were in operation.

The start of the strike had an instant impact on the copper market, pushing up prices in London and New York.

In London, copper <MCU3> ended at $7,990 a tonne, from $7,840 on Friday, while in New York, copper for July delivery <HGN7> was 1.4 percent higher at $3.66 per lb.

Collahuasi, 4,400 meters up in the Andes above the northern city of Iquique, produces 440,000 tonnes of copper per year, some 380,000 tonnes of it in concentrates and around 60,000 tonnes in cathodes, according to 2006 figures. It also produced 3,362 tonnes of molybdenum last year.

CONTINGENCY PLAN

Asked how long the mine could operate normally given the stoppage, a management spokesman said: "We don't know that. That's something to discuss in the next few days, but we have a plan which is allowing us to keep up our production of refined copper."

Xstrata, which has a 44 percent stake in Collahuasi, said in a statement it "deeply regretted" the strike.

"Collahuasi has developed a contingency plan that will prevent the interruption of its operational activities," it said, without giving details.

Aside from its unionized staff, Collahuasi employs around 380 non-unionized workers. It can also call on 1,300 subcontracted workers from other companies, although it is unlikely they would be able to fulfill the roles of unionized staff.

Hours after starting their strike, union workers and supporters marched through Iquique to press their claim for improved pay and conditions.

A union source told Reuters 1,000 people joined the march and that it ended in scuffles with police.

During talks last week, the Collahuasi management company twice raised its initial pay offer from 3.2 percent to 3.5 percent and finally 4.0 percent, but workers demanded an 8 percent raise.

They also want improved health and education benefits, a housing stipend and a retroactive share of soaring company profits from 2005 and 2006, when copper prices were at record levels.

(Additional reporting by Antonio de la Jara and Manuel Farias)

http://www.boston.com/business/articles ... per_firms/

Those strikes are a blessing for all the other producers in Chile and abroad, it make fly prices. I wonder if Codelco may provoke this strike intentionally, a strike at this moment appears more like a good business than a problem.

Yeah, go price of copper!! Take out $4!! The commodity boom is alive and well.

My wish is that Chile wisely use those incredible copper and other commodity earnings to benefit the entire population of this country.

This begs the question, is it wise to accept USD for such a valuable commodity asset?

Why does the Chilean Central Bank have NO gold reserves? Guevones culeados in my book...

It's funny how the price of copper skyrocketting effects us in the states.
A new wave of crime (at least in Chicago) is the theft of everything copper, from the A/C condensers to the electrical wiring to the plumbing in a new building.The price at the retail level has hit the roof in the last few years and now professional theives have gotten into the game. I have been hit 6 times this year alone, on one occassion the electrical supply feed to a condo building was robbed $6000 USD in damage
I guess I should have invested in the commodity instead of the actual product

Its not just in CHile...2 years ago we had 2 kms of copper line coming into our place swiped...they came at night about 2 am during a mother of a storm...we had no power for 3 days....now on my new place I'm running all my wire in aluminum/shielded so we don't loose it again...

p out

What is the Chilean military going to do with all that cash? Apparently, they get 10% of the copper profits, (not for salaries, only for equipment etc.)

You can only buy so many Humvee's.

300 estra units of Leopards, more F15, trucks, armored jeeps, fragatas, missile boats, 2 submarines, etc. It is a lot of cash to be spend but probably they are purchasing low profile equipment to avoid a regional weapons race. Maybe some electronic gadgetry may be as useful as conventional weapons and dont raise too much noise

tombrad...

Very good comment on conventional equipment and avoiding an arms race in the southern cone....I am going to think about that...the strategic and tactical points are very interestiing...


pout.

I guess that people in the military may be concious on that: hi-tech offer alternatives to skip the red flags raised by conventional arms purchase. "No solo de tanques vive el hombre"

eco

CHINA, CHINA, CHINA!!!!!

That would more or less sum up the copper market.

China because of its fixed currency is buying up all the raw materials in the World it can. Consider that the fastest growing economies in the World, and about 1/6 - 1/3 of the World populations (just China and India combined), still do not have electricity or phones in most of the homes. That means copper.

China is going to eventually let loose with its currency, and the results will be anything but nice for everyone concerned. I would not even want to speculate on what the impact of 3 RMB = 1 dollar would be on the Worlds economy with the deficits that everyone has to China. For now, they are happy to be paid about 7 RMB to the dollar for their products, and buying copper and other raw materials from the rest of the world that really do have a market value with their artificially valued currency. China is basically stripping the World clean.

I once had a beer with an American oil driller that was working for the Chinese government at a bar in China, just over the boarder from Hong Kong. He told me that China was sitting on several of the Worlds largest oil reserves. He said they were just smaller than the entire reserve of Iran. They were purposely just exploring and not producing, because it was far cheaper for them to buy from everyone else at the moment. It was literally to valuable to drill.

Knowing the Chinese, I would say watch about the time of the 2008 Olympics for big moves in their currency. They only thing I base this on is the face saving / political show that would accompany it ( It's a Chinese culture thing ). To them, it is really not about the money.

The good news for Chile is that it is such a small economy that it has very little to loose from free trade agreements, and lots to gain. That is as long as they plan for the rainy day. The States and Europe are at China's mercy right now.

UPDATE 2-Workers at Chile Collahuasi copper mine end strike

By Gideon Long


SANTIAGO, July 13 (Reuters) - Striking workers at one of Chile's biggest copper mines, privately owned Collahuasi, accepted a new management offer on Friday and said they would go back to work on Saturday.

The price of copper turned around on the news, drifting into negative territory in London after starting the day firmer.

Collahuasi, majority owned by global miners Xstrata Plc (XTA.L: Quote, Profile , Research) and Anglo American (AAL.L: Quote, Profile , Research), accounts for around 8 percent of Chilean copper output. Chile provides the world with a third of all its copper.

Management and union leaders reached a deal in the early hours of Friday and the 698-member union put it to a vote.

"More than 600 workers approved the proposal. We'll go back to work from tomorrow ... everything is finished," union President Hernan Farias told Reuters.

He said the first shift would start at 8 a.m. on Saturday. Continued...

http://yahoo.reuters.com/news/articlehy ... ews&rpc=44

Have you guys been watching the peso ride over the last couple of months?

As we charge in dollars and pesos, we are always crossing our fingers hoping we end up on the right side of the dollar or peso fence.

The thing that has saved us the most is that we have income sources both in Chile and internationally to balance the books. Similar to the way big companies do it, we only move money in to and out of a economy if we absolutely have to. Unlike the big companies, we have to cross our fingers that there are no dramatic moves.

If we enter in to a contract with a client, we have to hope we can close it out before there are any big moves. Long term contracts internationally when you are a small fry will make your hair go grey wondering if you are going to be super rich or super poor.

We are not exactly doing daily blocks of 10 Million dollar currency trading either, but it still makes your hair stand on end. It is that 499 pesos to the dollar floor that I am waiting to give out.