Based on the last three years of dividends from the company, the bonus requested by the union exceeds $ 20 million per worker according to Plusmining’s calculations. The miner, controlled by BHP, proposed benefits of $ 18 million in its latest offer.
Escondida is in a key deadline for its collective bargaining. Five days of Good Offices starting this Tuesday, August 3, which, if they are not fruitful in terms of an agreement, will lead to the conclusion of the strike that has already been voted favorably by almost 100% of the 2,300 members of Union No. 1 of the largest mining company in the world and controlled by BHP. With the pressure of the countdown, the main obstacle that stands in the way of a pact between the parties is the end of conflict bonus.
The last offer that the representatives of the company put on the table contemplated benefits for $ 18 million, but the workers point to another formula and amount. “We estimate that the equivalent of 1% of the dividends received by the owners, as a one-time recognition bonus to be distributed among all workers, is completely reasonable,” the union said in the statement prior to the statement that informed the vote. of the strike.
According to the specialized consultancy Plasmining, this request specifically targets the dividends of the last three years until 2020, which together total about US $ 6,413 million. In this way, the 1% sought as compensation by the Escondida union reaches US $ 64 million, which would establish a bonus for each worker that ranges between $ 20 million and $ 21 million, considering an exchange rate around the $ 700 per dollar.
“I don’t see any major surprises in this petition. It is another way of asking for what they have always asked for. Nothing changes, except this strategy ”, indicates the director of Plasmining, Juan Carlos Guajardo, who details that in the last collective bargaining of Escondida the union has always requested bonuses above $ 20 million.
“What they are trying to do is shift their attention to the profits of the company, instead of putting it on the amount of the bond, which could be difficult to explain at the time that Chile lives, where there is a lot of public scrutiny on this type of things, “adds Guajardo.
The debate beyond Escondida
Beyond Escondida, where company and worker representatives are focused on trying to close this gap of between $ 2 million and $ 3 million that separates them from an agreement, analysts are already making a judgment regarding the discrepancies that take place in this negotiation.
The most severe is Gustavo Lagos, academic from the Department of Mining Engineering of the Catholic University, who particularly questions that the workers raise in favor of his petition that “it is preferable that this minimum percentage (1% of the dividends) is in benefit Chileans and do not go abroad ”, according to one of his recent statements.
For Lagos “the argument that the company takes this home is not in favor of passing it on to them, who are among the best paid workers in Chile, it is simply to keep it in the country. If so, unless it is aimed at the people who need it most, even if it is for unemployment funds, or if they are directed to an innovation fund in Antofagasta ”.
The academic goes further and asks: “How much is enough for the workers of Escondida?”, Stating that “they should understand that the whole of Chile is looking at this and that frankly $ 18 million for collective bargaining, with the hardships that the people in Chile, it’s almost an insult ”.
Guajardo, meanwhile, questions the tone of this negotiation and in general all those of the sector. “Labor negotiations suffer from one issue and that is that they do not establish a mechanism for discussing long-term issues for the development of mining companies, for example, about productivity and how to associate that with labor compensation,” he says.
From his perspective, “this is not only in Escondida, it is a generalized issue”, underlining that “there is too much transactionality, things like ‘I buy you time or I ask you for a bonus’, instead of also taking advantage of seeing how the mine develops in the long term and how these benefits are distributed over time ”.
Market reaction
At the moment, the market does not seem to be very upset with the development of these events. In the first session after the strike vote, the copper pound lost 0.1% to close at US $ 4,417. “The price of copper tends to incorporate some important market events in advance, so the possibility of a strike in Escondida should be reflected in prices,” Guajardo explained in any case.
His opinion is shared by Eleni Joannides, an analyst at Wood Mackenzie, who tells The Wall Street Journal that “at current prices, the Escondida negotiations seem to be integrated into the market.” In any case, she indicates that “any significant impact on the market and therefore on prices, will depend on whether there is a strike in 10 days or not.”
According to the analysis of Sabrin Chowdhury, an analyst at Fitch Solutions, the situation may generate further alterations, stating that “the market is already tight, with demand that exceeds supply, which is struggling to return to pre-Covid levels . If the strike actually happens, copper will reach a new record, higher than what was seen in May. ”
Among the largest investment banks, Morgan Stanley was the one that highlighted what is happening in Escondida in its analysis, indicating in a report that the contract negotiations “are a key focus” for the short-term copper outlook. While it forecasts a copper surplus in 2022 as production increases outstrip demand, it highlights that the global market is experiencing a metal shortage this year.
Source: La Tercera
