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UPDATE 2-BHP-Mitsubishi Alliance coal miners to strike next week
June 8, 2011 / 11:30 AM / 6 years ago

UPDATE 2-BHP-Mitsubishi Alliance coal miners to strike next week

(Adds details, company, analyst comment)

By Rebekah Kebede

PERTH, June 8 (Reuters) - Miners at Australia’s BHP Billiton Mitsubishi Alliance (BMA), the world’s biggest exporter of metallurgical coal, voted on Wednesday to strike, likely early next week, a union official said on Wednesday.

“Monday and Tuesday, it looks like strike action is going to take place ... 4,000 workers are going to take strike,” an official for the Construction Forestry Mining and Energy Union said.

The official said he could not confirm the length of the strike, which would be the first industrial action at BMA mines in more than a decade. The four thousand workers make up about two-thirds of BMA’s total workforce at the mines.

A prolonged strike could hike metallurgical prices, raising costs for Asian steelmakers, though BHP, which has long lobbied to move to monthly from quarterly contracts may not be in a hurry to settle, according to one analyst.

“While 2011 third quarter monthly price contract talks continue - BHP/BMA will be in no rush to settle... it actually benefits from the supply tension that this dispute creates,” Tom Price, a commodities analyst with UBS said in a note earlier this week.

The strike would hit BHP Billiton just as Australia’s coal mining sector, which supplies nearly two-thirds of the world’s traded steel-making coal and more than 10 percent of the country’s goods exports, was getting back on its feet after heavy Southern Hemisphere summer rains forced several mines to declare force majeure on exports.

Coal miners have complained about different pay levels for union workers and non-union contractors and are worried over job security, according to the union. [ID:nL3E7H3017]

Union workers voted in favour of the right to strike late last week, but gave no indication that an industrial action was imminent and union officials had held out the possibility of a strike only as a last resort if talks with the alliance broke down.

BHP Billiton said it has tried to accelerate negotiations by offering a 5 percent annual pay increase and a A$5,000 signing bonus for those who sign a new agreement with the company.

“BMA is extremely disappointed that the unions have elected to take this unnecessarily aggressive action,” a BHP spokeswoman said late Wednesday.

Disruptions to the mines could impact the Australian economy adversely -- the mines have a combined production capacity of more than 58 million tonnes per year, with nearly all of their output shipped overseas for steel production.

Coal is Australia’s largest export and exports of metallurgical coal accounts for A$24.5($24.5) billion of the nation’s A$202.17 billion in total goods exports last year, according to government data.

Queensland state lost up to 30 million tonnes of coal production when monsoon rains and a cyclone battered the eastern seaboard between November and February, exacting a high financial toll on the national economy.

The drop, equivalent to 15 percent of annual output, has curbed economic growth and exacerbated a worldwide shortfall of coal.

Reporting by Rebekah Kebede; Editing by Ed Lane

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