Southern Copper CEO hopes to prevent strike at Peru mines

SANTIAGO (Reuters) - Southern Copper Corp hopes to dissuade workers at its Toquepala and Cuajone mines in Peru from striking this month, as a second labor union this year in the world’s No.2 copper producer seeks a larger share of profits.

Southern Copper's chief executive officer (CEO) Oscar Gonzalez gives an interview during the Reuters Latin America Investment Summit 2012 in Lima, May 30, 2012. REUTERS/Alejandra Devescovi

The company’s chief executive, Oscar Gonzalez, said he did not think the labor ministry would give the green light for the strike, adding that the firm could hire contract staff to protect output if its workers went against the government.

“A union in a country that’s facing economic problems can’t paralyze a company and keep it from generating revenues for the state,” Gonzalez said in an interview on Monday at the CRU World Copper Conference in Santiago, referring to Peru’s faltering growth prospects this year amid destructive flooding.

“They’re the ones who are going to look bad,” Gonzalez said of workers planning to strike.

The union, one of five representing Southern Copper workers in Peru, plans to hold an indefinite strike starting April 7 or 10, according to a regulatory filing.

Gonzalez said a labor agreement with workers was still in force and the company was not planning to give them a bigger share of profits, though it would seek agreement through dialogue.

Toquepala and Cuajone, both in southern Peru, together produced some 310,000 tonnes of copper last year, according to government data.

Union representatives were not immediately available for comment outside regular working hours.

Last month, workers at Peru’s biggest copper mine, Freeport-McMoRan Inc’s Cerro Verde, downed tools for three weeks to demand a better share of mining profits after production at the mine doubled and global copper prices improved.

Southern Copper, owned by Grupo Mexico, boosted its copper output by 21 percent to 900,000 tonnes last year on the back of an expansion at a mine in Mexico. Gonzalez said the company’s cost of producing 1 pound of copper is now the world’s lowest at a little under $1.

Gonzalez said former investment banker Pedro Pablo Kuczynski has improved the investment climate in Peru since replacing a former military officer as the country’s president last year.

Southern is now considering expanding the capacity of its smelter in southern Peru by 40,000 tonnes, or 14 percent, a move that would boost Kuczynski’s goal of bolstering local metals processing.

Gonzalez also said he hoped Kuczynski’s government would this year issue a long-awaited construction permit for Southern’s $1.4-billion Tia Maria copper project.

The proposed mine, which would take two years to build and would produce around 120,000 tonnes of copper per year, was derailed in 2015 by protesters who feared it would pollute a farming valley.

“We hope Tia Maria can happen but there’s a question mark, it depends a lot on the government acting appropriately,” Gonzalez said.

He added that Southern has offered to buy all Anglo American Plc’s 81.9-percent stake in the proposed Quellaveco copper mine in southern Peru, but has not yet received an answer.

Anglo has previously rebuffed Southern’s bid to buy part of its Quellaveco stake.

Reporting by Mitra Taj; Editing by Michael Perry and Joseph Radford