CHILE: No Light at End of Tunnel in Miners’ Strike

By Daniela Estrada Reprint | | Print |

Daniela Estrada

SANTIAGO, Aug 23 2006 (IPS) - While the Chilean government has stepped in to try to help restore dialogue between 2,000 strikers and management at the foreign-controlled Escondida mine, site of the world’s largest copper deposits, experts are closely following the related fluctuations in the price of the metal.

The workers’ strike was on its 17th day Wednesday, following the company’s Tuesday-night rejection of the union’s final wage proposal.

The miners say their demands are justified in the context of the enormous profits raked in by the copper industry in the past three years, as the price shot up from 80 cents a pound to the current 3.40 dollars a pound, largely driven by demand from China.

In the first half of the year, Escondida – the world’s largest private copper producer – recorded profits of 2.9 billion dollars, three times what it made during the same period in 2005. By the end of 2006, the company could be looking at up to 7 billion dollars in earnings, according to some estimates.

The company broke off negotiations Tuesday night, rejecting the union’s scaled-down demands of an eight-percent wage increase and a bonus of 10 million pesos (approximately 20,000 dollars). Union president Luis Troncoso said the workers will respond by pursuing the fight “to the bitter end.”

On Monday, 98 percent of the 2,052 strikers employed by the mine, which is located at 3,100 metres above sea level in the region of Antofagasta, 1,300 kilometres north of Santiago, rejected the company’s last attempt to resolve the dispute that broke out on Aug. 7.

The company had offered a four percent salary increase and productivity bonuses of 9.5 million pesos per worker. The union at the time countered with demands for a 10 percent salary increase, in addition to bonuses of 16 million pesos per employee. The miners had initially requested a 13 percent pay raise.

Miners in Chile generally earn 500,000 pesos (approximately 950 dollars) a month.

The striking miners said it was “unfortunate” that, as of Tuesday, the company was set to take advantage of Chilean labour laws that permit it to hire replacement workers and negotiate with individual workers outside of the collective bargaining unit, actions that could seriously undercut the movement.

The workers said they planned to file a legal complaint Wednesday, accusing the company of union-busting, after reports that supervisors had telephoned several unionised workers and threatened to fire them.

Australian mining giant BHP Billiton holds a 57.5 percent stake in the Escondida mine, which produces 1.3 million tons of copper annually. The remainder of the shares are distributed among British-based Rio Tinto, the JECO Corporation, a Japanese consortium headed by the Mitsubishi Corporation, and the World Bank’s International Finance Corporation.

The open-pit mine, which produces copper concentrate, accounts for eight percent of the world’s copper production and more than a fifth of Chile’s output.

Throughout the strike, numerous demonstrations have been held, including road blocks and tire-burning across the mine’s access routes, in downtown Antofagasta and at the port of Coloso, where the metal is exported. And since the very start, workers have been camped out at the mine’s sports complex.

The most violent confrontations occurred Aug. 17 at the mine entrance, where some 400 workers clashed with police, prompting the company to shut down operations indefinitely. Up to that point, the mine had continued to operate at 40 percent capacity.

While the Chilean government had largely kept to the sidelines, on Aug. 18 President Michelle Bachelet asked Labour Minister Osvaldo Andrade to try to bring the two sides closer together. But so far no significant progress has been made on that front.

Andrade said the strike would not affect the country, and underscored that Chile has fewer labour conflicts than other countries.

He also dismissed the idea that the Escondida strike would colour future collective negotiations in other mining companies. However, there is some concern about the strike’s repercussions on the state-run National Copper Corporation (Codelco), which enters talks with workers in September.

By Aug. 17, Escondida had lost 100 million dollars, and the strike’s daily cost is estimated at between 15 and 20 million dollars. The company has assured that its reserves will be sufficient to meet international commitments.

Copper prices on the London Metal Exchange (LME) were unaffected by the strike last week, closing at 3.42 dollars per pound, down 4.7 percent from the previous Friday.

However, the outlook changed on Monday, when prices climbed 0.60 percent to 3.44 dollars per pound. Tuesday saw prices up another cent per pound, according to the Chilean Copper Commission.

Nevertheless, the director of the Catholic University’s Mining Centre, Gustavo Lagos, said the Escondida strike would not drive up international copper prices, because the shutdown of the mine would be offset by slow growth in the United States. The expert even predicted a downturn in copper values over the next few days.

“Additional consequences of the strike include the fact that the treasury is losing four million dollars per day in taxes, including royalties, and the shutdown’s effect on the Monthly Economic Activity Indicator and gross domestic product,” Lagos told IPS.

Carmen Espinoza, head of the non-governmental Labour Economy Programme (PET), told IPS that the strike at Escondida is “a valiant effort to improve the distribution of wealth in an industry that has made huge profits in recent years.”

The lawyer suggested that the company has not wanted to give in to miners’ demands for fear of setting a “symbolic precedent,” as in her opinion even a 30-percent increase in worker salaries would not cut significantly into the company’s profits.

“The company wants the workers to accept whatever it offers. That’s why, when the union rejected its proposal, it shut down production. The miners are aware that this is a political struggle, and that they are risking their jobs. I think they are making a generous sacrifice on behalf of all workers,” said Espinoza.

She also criticised the Chilean media’s coverage of the dispute, as the press has focused on the idea that miners already earn more than other labourers in Chile, implying that the union’s demands are out of line.

“First, miners earn less in Chile than they do in other countries. You also have to factor in the significant physical and mental effort and other consequences, given that they work at high altitudes, away from their families and under intense pressure to produce,” she explained.

Similarly, Espinoza charged that Escondida employees have received only weak support from other social organisations and unions, which she said have focused on the surface of the conflict – the wage negotiations. “The root problem is the distribution of wealth, and how to establish mechanisms to improve it,” she concluded.