Workers at Escondida, the world’s largest copper mine, rejected a BHP collective agreement offer, a decision which could lead to a strike, should the expected mediation fail.   

Last Thursday, a total of 2,371 workers, equivalent to 99.75% of Union members rejected the BHP collective agreement offer and voted in favour of a strike. The Union reiterated its demand for 1% of dividends to be distributed to workers and that shifts and benefits remain untouched. The Union claimed that the current offer uses ‘one-time bonuses that try to hide the definitive loss of conditions’ and that it extended workdays as well as cutting benefits. 

Under Chilean labour laws, either party can request up to five days of government-mediated negotiations, which can be extended by another five days, if both parties agree, to prevent a strike. BHP said in a statement that it would seek government mediation in the coming days, but the Union declined to comment on this request. 

The last time Escondida workers went on a significant strike was in 2017. The strike lasted 44 days, impacting production, drove up copper prices and became the longest private-sector mining strike in Chile’s history. Escondida accounts for about 5% of the world’s primary copper production.  

Strikes, labour and social unrest are recurrent in Latin America and represent major issues for the copper industry, along with falling grades, changes in regulatory and environmental constraints, primarily water. Chile and Peru account jointly for about one-third of total primary copper production.  

The copper market reaction to the potential strike has been muted as prices have been more impacted by the global market correction. Also, the market may believe that the most likely scenario is for a successful mediation and an agreement between BHP and the Union. It remains, however, a close call.