Last week, a last-minute strike was averted at Chile's Escondida copper mine, the world's largest, after BHP and unions reached a compensation deal.
However, analysts point out that this does not mean the crisis in global copper supply is over - instead, BHP's acquiescence to a higher-level welfare deal could provoke more copper workers around the world to join the strike.
BHP acquiesced to a benefit deal that was significantly higher than in the past
Amid soaring copper prices this year, tensions are growing between copper miners around the world who are reluctant to cut their profits, as copper unions around the world and the governments of Chile and Peru, major producers of the metal, want to get a piece of the action.
Escondida, located in the Atacama desert in northern Chile, is the world's largest copper mine, producing almost 5 per cent of the world's copper supply. In July, the Escondida union demanded higher wages and benefits from BHP, but the two sides initially failed to reach a deal. After a period of stand-off and negotiations, the two sides reached an agreement on August 12th, and international copper prices have since fallen.
It has been revealed that BHP's agreement with the union includes benefits of about $30,000 per employee, including a bonus equivalent to 1 per cent of the dividend, to be distributed pro rata to all employees.
Such benefits are significantly higher than those offered to unionized workers at the Los Pelambres copper mine of The Chilean miner Antofagasta, which paid $24,000 in March.
Juan Carlos Guajardo, head of Chilean consultancy Plusmining, said unions were negotiating with high expectations for benefits because of high copper prices. With the record benefits package, companies "implicitly acknowledged these higher demands."
Such an agreement could lead to higher demands for benefits from unions at other copper mines, making labor negotiations at other mines more difficult to reach and raising the risk of strikes at other mines, analysts said.
More copper mines are at risk of strikes
Although the strike crisis at Escondida has been temporarily lifted, Labour negotiations are still under way at many of the world's biggest copper mines. These include The El Teniente copper mine, its second largest, the smaller El Salvador mines and the Ministro Hales Mines, BHP's Cerro Colorado mine, Anglo American's El Soldado copper mine. And the Polish Copper Company's Sierra Gorda.
More recently, three unions at Chile Copper's Andina mine announced a collective strike. The local union representative pointed out that during the worst of the COVID-19 outbreak last year, the national copper company of Chile increased production slightly, thanks to the work of workers. So while Andina's influence is not as great as Escondida's, the company should offer more to current and incoming employees.
But Chilean copper may struggle to match BHP's deep pockets as the company faces a transition and is trying to cut costs to fuel a $40 billion, 10-year plan to renovate old mines. The company said its final offer to the union was "already the best effort within the framework of the company's transformation".
Japan's largest smelter, JX Nippon Mining, also went on strike last week at its Caserones copper mine, but talks between the company and workers have so far failed to make progress.
In addition, Alejandra Wood, executive director of the Chilean Copper Research Center (CESCO), said the Chilean government is discussing raising royalties to help protect social welfare and has proposed changes to the constitution that would impose stricter rules on the rights of rivers, lakes, glaciers, mines and communities. It also puts more pressure on miners.
"Copper prices are high and there is a general view that [copper miners] have to share the profits... Current market and political conditions are undoubtedly affecting workers' expectations.
