June 11, 2018 / 9:50 PM / in 14 days

BHP responds to contract proposal from union at Chile's Escondida mine

SANTIAGO (Reuters) - Global miner BHP said on Monday it had responded to the latest contract proposal from unionized workers at its Escondida copper mine in Chile, the world’s largest, triggering a new round of talks that could last a month or more.

FILE PHOTO: BHP Billiton Chief Executive Andrew Mackenzie is silhouetted against a screen projecting the company's logo at a round table meeting with journalists in Tokyo, Japan June 5, 2017. REUTERS/Kim Kyung-Hoon/File photo

The union’s proposal, filed with the company in early June, included a salary increase of 5 percent and a one-time bonus of $34,000, equivalent to 4 percent of dividends distributed to shareholders.

In a statement, BHP said it was now ready to discuss the “different points of interest” at the negotiating table.

“The company hopes ... to reach a mutually beneficial agreement, and to touch on issues like the bonus and salary increases, which were not addressed in our response,” BHP said in a statement.

The company’s response marks the start of a final round of negotiations more than a year after an historic strike at Escondida in early 2017 shut down the mine for 44 days, jolting the copper market and depriving BHP of $1 billion in production.

Workers at the time opted to utilize a provision of Chile’s labor law that allows unions to extend the previous contract for 18 months.

Early talks began again in April, but failed to reach agreement.

Copper prices have increased by more than 50 percent since hitting a nine-year low in 2016, a favorable trend that could provide unions more leverage in negotiations.

Benchmark copper on the London Metal Exchange touched $7,348 a tonne last week, its highest level since January 2014, amid fears of another wave of supply disruptions at Escondida.

The union at Escondida said last Friday it saw a “favorable scenario” for reaching a deal on a new labor contract with the company, citing, in part, higher copper prices.

Talks at Escondida are slated to continue through July 24, at which point the company is required by Chilean law to present its final contract offer, according to a calendar provided by BHP.

Unionized workers at BHP’s Spence copper mine, a much smaller operation in northern Chile, late on Sunday approved a new labor contract, including a bonus of $21,500 per worker.

Reporting by Dave Sherwood; Editing by Sandra Maler

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