Workers Go on Strike at Chile’s Largest Copper Mine in the World

Following the collapse of salary negotiations with Australian resources behemoth BHP, employees at the largest copper mine in the world are going on strike in Chile. This uncertainty has placed a pall over the commodity market on Wednesday.

Approximately five percent of the world’s copper, a valuable metal used in everything from rechargeable batteries to electrical wiring, is extracted each year from the Escondida mine in northern Chile.

Analysts noted that the immediate effects of the strike should be mitigated by the worldwide surplus of copper inventories, but if production is halted for longer than a week or two, there is a chance that the impact could worsen.

The large open-air mine’s principal owner, Australian-based BHP, announced that reduced operations will go on as non-union workers implemented backup plans.

When workers at the Escondida mine stopped using their tools for 44 days in 2017, production at the mine came to a complete stop, costing BHP $740 million and reducing Chile’s yearly economic output by 1.3%.

Motivated by the increase in worldwide pricing earlier in the year, union representatives have reportedly asked for a larger portion of the profits for the 2,400 employees at Escondida.

The union said that in response to unfulfilled demands for increased bonuses, shortened workdays, and pay based on the total number of years spent working at the mine, it went on a “legal strike.”

According to Chilean media sources, BHP provided a one-time incentive of over $29,000, which was less than the $36,000 that was requested.

The strong copper prices that were observed in May of this year have fallen in the following months as large reserves of refined metal are amassing in Chinese and other depots.

Ole Hansen, a commodity analyst at Saxo Markets, stated in a recent research note that “total stocks at warehouses monitored by the exchanges in London and Shanghai have risen to levels not seen since the depth of the pandemic back in early 2020.”

Instead, we have seen a time of significant supply/demand mismatch, mainly because of poor demand, as inventories tracked by the major futures markets continue to build at a rapid pace.

By Wednesday midday, the share price of BHP had decreased by around one percent in Sydney.

Known as the “Big Australian,” BHP has shown a growing inclination to acquire fresh copper sources.

It served as a major motivator for the business’s ultimately unsuccessful attempt to acquire rival Anglo American earlier this year.

– Pure copper

The foundation of the developing clean-energy sectors is thought to be copper, an electrical conductor used in wiring.

It is an essential part of solar panel, electric car, wind turbine, and rechargeable battery production.

Over the last 25 years, copper prices have risen by around 400%, and in April, they surpassed $10,000 per tonne for the first time in the previous two years.

It is anticipated that global demand will increase by up to 2.5% annually.

The term Escondida, which translates as “hidden” in English, came from the protruding mineral reserves that are buried beneath the arid surface of the northern Atacama Desert in Chile.

BHP, along with minority partners Rio Tinto and Japan’s JECO Corp., owns slightly less than 60% of the mine.

Roughly 25% of the copper produced worldwide comes from Chile, with the Democratic Republic of the Congo, China, and Peru following.