Labor Strike Jolts World's Biggest Copper Mine — Update

By Rhiannon Hoyle

The world's biggest copper mine is in the grips of a labor conflict that risks disrupting supplies of a metal essential to the world's manufacturing and construction industries.

Wage negotiations at the Escondida copper mine run by BHP Group in the Atacama Desert of northern Chile ended without agreement, triggering a walkout on Tuesday at an operation that accounts for roughly 5% of global mined copper supply.

Members of Union No. 1, accounting for roughly 90% of Escondida's operators and maintenance staff, are pressing for a bigger slice of the mine's profits. A disruption to sales from the giant operation could tighten a market that has recently softened due to concerns about Chinese and U.S. demand and the outlook for electric vehicle sales, traders say.

BHP said Escondida continues to operate under contingency plans. Company and union representatives are expected to resume talks Wednesday in Chile.

The price of copper, the world's favorite electricity conductor, surged to a record high earlier this year on optimism about its role in the clean-energy transition and the data centers being built to serve red-hot demand for artificial intelligence. Copper was relatively steady on the London Metal Exchange in Asia mid-Wednesday.

The outcome of labor talks at the Escondida mine will be closely watched by other unions and companies in Chile, where a number of operations face usual three-year wage negotiations this year, Goldman Sachs analysts said in a note on Sunday. "It could set the tone for the balance of negotiations across the industry," they said.

Escondida has accounted for three of the eight major copper-mine strikes in Chile over the past two decades, and the Goldman Sachs analysts said the risk of strikes has been recently fanned by the rising cost of living, elevated copper prices and a tight skilled labor market.

Other companies including Rio Tinto and Mitsubishi hold stakes in Escondida.

Some workers at Lundin Mining's Caserones copper mine in Chile also walked out this week following failed pay negotiations. The workers are represented by one of three unions at the mine and account for about 5% of the total workforce of that operation, said Lundin, which added that some activities would be reduced as a result of the strike.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

August 14, 2024 02:21 ET (06:21 GMT)

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