(Bloomberg) -- BHP Group and union leaders at the Escondida operation in Chile are sitting down for one last session of mediated wage talks in a bid to avoid a strike at the world’s biggest copper mine.
In a tense final day of mediation, BHP delivered its sweetened wage offer — including a $28,900 bonus — directly to workers and the labor regulator, saying union leaders didn’t show up to scheduled sessions earlier Monday, according to an internal document seen by Bloomberg.
Union bosses responded by accusing BHP of disclosing terms without prior discussion, saying the company knew they wouldn’t be attending talks earlier in the day. Despite the tensions, union negotiators vowed to attend a session with management at 6.30 p.m. Chile time.
The two sides have until midnight to reach a deal or agree to extend mediation. Failure to do so would set up a stoppage at a mine that accounts for about 5% of all the world’s mined copper. That would disrupt metal shipments for Melbourne-based BHP, while potentially easing pressure on copper futures that have retreated in recent months along with dimming prospects for the global economy.
BHP’s new proposal includes a signing bonus of 27 million pesos ($28,900) per worker, as well as improvements in benefits over the three-year contract. Workers had sought a bonus of more than 30 million pesos. The union represents roughly 2,400 workers at the site.
Escondida churns out more than 1 million metric tons a year, making it by far the biggest supplier of the copper. Some analysts, including those from Bloomberg Intelligence, see BHP Group overtaking Codelco this year as the top global copper producer.
The union rejected the firm’s wage offer at the end of regular talks, sending the process into a final mediation phase. Chilean labor rules allow an extension of mediation if both sides agree.
Collective bargaining in Chile is often marked by brinkmanship and last-minute agreements. Still, Escondida has been the scene of lengthy stoppages in the past, including a 44-day strike in 2017.
Benchmark copper traded in London surged to record levels in May as bullish investors placed bets on shortages. That emboldened unions seeking a share of the windfall for their members. But prices have since pulled back about 18%, undermining some of that leverage as companies look to avoid big increases in fixed costs in a cyclical and capital-intensive business.
Still, negotiations come at a time of global tightness of copper concentrate — the raw material produced at Escondida and used to feed smelters — even though the market for refined metal is well supplied for now.
(Adds comments from union)
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