A preliminary agreement between Escondida’s main union and BHP was reached on 16 August. 

Strikes do not usually tend to be long-lasting in Chile, which partially explains why market reaction to the Escondida strike news last Tuesday was muted. Escondida is the world’s largest copper mine with 1.1Mt production in 2023, 5% of the world’s total output. In H1 2024, the mine produced 614kt of copper, accounting for nearly 24% of Chile’s production and contributing to about 3% of the country’s GDP.

The Union's initial request was for 1% of the shareholder's dividends to be distributed to the workers, or about US$35,000-36,000 per worker. BHP’s latest offer of US$28,900 was not accepted, leading to the strike. Under the Friday 16 August agreement, BHP offered workers US$32,000 as a bonus and an additional US$2,000 in soft loans. The issue appears settled, but the Union warned that the strike could be restarted if the management does not ‘rectify its position’ over contract talks ‘as soon as possible’. Although strike risks are receding, the large amounts involved in the agreement will have implications for future negotiations within the copper industry.

Copper prices have lost most of the gains they made between March and May. Chinese demand remains weak, in line with the economy, and this factor, combined with a tight copper concentrate market, caused cuts in production at Chinese smelters. This situation could continue in the coming months, putting a cap on copper's short-term price upside.