BHP Says It Wants Agreement With Striking Chile Copper Workers

Aug. 10 (Bloomberg) -- BHP Billiton, the world's largest mining company, said it wants to reach an agreement with the union at its Escondida mine in Chile to settle a strike that cut copper output.

Road blocks laid by workers earlier in the week at the mine, the world's largest copper supplier, have been cleared, said Emma Meade, a spokeswoman at Melbourne-based BHP Billiton., Pedro Marin, the union's spokesman, yesterday said BHP Billiton hadn't offered a new wage proposal to workers in meetings this week.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' BHP's Meade said in an e-mail.

The strike this week at the northern Chilean mine helped drive up copper prices in New York and London. BHP Billiton, the world's largest mining company, has said the labor dispute may disrupt deliveries of copper concentrate, which usually contains about a third copper.

MCX expecting three-fold jump in daily turnover


Ludhiana, Aug 09, 2006 (Asia Pulse Data Source via COMTEX) -- Enthused by the growing participation of traders and users in metal trading, the Multi Commodity Exchange (MCX) of India Limited is anticipating more than a three-fold increase in the per day value of trading and volume of metals traded by the end of this fiscal.

"With more and more traders and users of non-ferrous metals participating in metal trading, we expect that the daily trading and volume of metals, including copper, zinc and aluminum will increase over three times against present position by the end of this financial year," MCX, Manager (Product Knowledge Management), Ankit Singhal told PTI here.

Singhal was here to attend a seminar on metal trading.

At present, the per day turnover (single sided) of copper, zinc and aluminum in MCX stands at Rs 900 crore, Rs 150 crore and Rs 50 crore respectively. But the exchange expects daily turnover of Rs 3,000 crore in copper, Rs 400 crore in zinc and Rs 200 crore in aluminum by the end of this fiscal.

Similarly, it hopes that the per day volume size should jump to 50,000 MT in copper, 20,000 MT in zinc and 4,000 MT in aluminum.

The commodity exchange expects maximum participation in metal trading from Maharashtra, Delhi, Gujarat, Punjab and Madhya Pradesh.

The MCX has also tied up with Comex (New York based exchange) for copper and London Metal Exchange (LME) for other metal commodities for sharing expertise and knowledge in the trading.

Copper in London Rises to 3-Week High on Chile Strike Concern

Aug. 10 (Bloomberg) -- Copper prices in London rose to their highest in more than three weeks amid concern that supply growth may lag demand because of a strike at Chile's Escondida, the world's largest mine.

Union leaders at the mine, which supplied 8.5 percent of global mined copper last year, shelved talks yesterday after the lack of progress at a meeting a day earlier. BHP Billiton, which owns a controlling stake in Escondida, will meet the union today at 5 p.m. local time. BHP has said it may stop deliveries to smelters in Asia and Europe because of the stoppage.

``It looks like the strike's impact to production at the mine may be quite big'' as negotiations are still inconclusive, Yuan Fang, a metal futures trader at Shanghai Dongya Futures Co., said by phone today.

Copper for three-month delivery rose as much as $70, or 0.9 percent, to $8,100 a metric ton on the London Metal Exchange, the highest since July 17. The metal traded at $8,082 at 12:16 p.m. Singapore time.

Metal for delivery in October rose as much as 2,560 yuan, or 3.8 percent, to 70,250 yuan ($8,818) a metric ton on the Shanghai Futures Exchange. It traded at 70,020 yuan by midday break at 11:30 a.m. local time.

Pedro Marin, a union spokesman at Escondida, said leaders are evaluating whether to return to the negotiating table. ``We don't want more of the same,'' he said yesterday by phone from the city of Antofagasta.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' Emma Meade, a spokeswoman at BHP Billiton in Melbourne, said in an e-mail today. BHP Billiton, the world's largest mining company, offered a rise of 3 percentage points above the inflation rate compared with workers' demands for a gain of 13 percentage points.

Copper for cash delivery in Changjiang, Shanghai's biggest spot market, rose as much as 2.9 percent to 69,900 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Copper for delivery in September rose 1.5 cents, or 0.4 percent, to $3.725 a pound on the Comex division of the New York Mercantile Exchange at 12:08 p.m. Singapore time in after-hours trading.

BHP Says Chile Copper Stockpiles Are Low, Talking to Customers

Aug. 10 (Bloomberg) -- BHP Billiton said copper concentrate stockpiles at its Coloso port in Chile are ``very low'' and was talking to customers about deliveries after a strike at the world's largest copper mine stretched to a fourth day.

Supplies from the Escondida mine, which is operating at 40 percent capacity, are running down, Emma Meade, a spokeswoman for the Melbourne-based company said today.

The strike at the northern Chilean mine is helping drive up copper prices in New York and London. BHP Billiton, which owns 57.5 percent of the mine, has said the dispute may disrupt deliveries of copper concentrate, which usually contains about a third copper.

``With concentrate, the stockpiles at Coloso are actually very low,'' Meade said. ``We're running at 40 percent and we just need to talk to them about how we meet their requirements going forward. We're just going to be able to ship what we produce.''

Shares in BHP Billiton, the world's largest mining company, fell as much as 31 cents, or 1.1 percent, to A$26.92 on the Australian Stock Exchange. They traded at A$27.22 at 3:15 p.m. Sydney time.

Mine management and labor union workers are meeting again to discuss workers wage claim today after talks were postponed yesterday, Meade said.

``We are committed to continuing discussions with the union to reach a mutually agreeable outcome,'' BHP's Meade said in an e-mail.

Road blocks laid by workers earlier in the week at the mine were cleared. Pedro Marin, the union's spokesman, yesterday said BHP Billiton hadn't offered a new wage proposal to workers this week.

AFX - 14 August 2006


SEOUL (XFN-ASIA) - The world's fifth largest steel maker, POSCO, has rejected reports it is having trouble covering nickel short positions on the London Metal Exchange (LME) and is being forced to roll them forward at increasingly greater expense.

'It is a groundless market rumor,' a POSCO spokesperson said. Nickel is a key ingredient for making stainless steel.

Earlier The Wall Street Journal reported that POSCO, was short by 10,000 tons of nickel against its LME positions, having bet prices would fall. Prices though, as a result of strong demand from stainless-steel producers, have been on an upward trend this year.

'It makes no sense. The positions for POSCO to cover is less than 1,000 tonnes -- a futures deal traded in April,' the POSCO spokesperson said.

The POSCO official also rejected the report's claim that POSCO was some 20,000 tons short on the physical nickel market, after it underbought against its customer requirements.

'POSCO, a steel maker, is the very consumer, not a speculator, of nickel. Most of its demand is supplied by long-term contracts,' the official said.

The report said although the price at which POSCO went short, or bet that the price would fall, isn't known, to buy 30,000 tons of nickel on the LME and physical market currently would cost at least 810 mln usd based on an LME price of 27,000 usd a ton. In London Friday, nickel for delivery in three months time closed at 26,600 usd a ton on Friday.

Reuters - 14/08/2006 13:42

Copper higher on supply upsets


London - Copper prices rallied on Monday as supply started to get tighter in the biggest consumer of the metal and as a strike at the world's largest copper mine moved into a second week.

"Metals are consolidating just below recent peaks on supply disruptions," UBS analyst Robin Bhar said.

London Metal Exchange (LME) copper was up $100 at $7 670/7 690 a tonne at 09:40 GMT, completing its recovery from the 4% loss seen at one point on Friday after talks resumed at the key Escondida mine in Chile between the union and majority owner BHP Billiton.

The union's president said on Sunday that talks might last another week at the mine, which accounts for 8% of the world's copper output.

Copper hit a record $8 800/tonne in May.

In China, which consumes a fifth of the world's copper, recent sales of metal by Beijing's State Reserves Bureau had been weighing on futures prices in Shanghai and London, sharply reducing the country's imports and encouraging exports.

But that selling programme may now be reaching its conclusion.

"The SRB was looking to sell 100 000 tonnes of copper this year. They look to have sold 60 000 to 80 000 tonnes. Those sales have depressed the local market to the point where it was not worthwhile importing copper," Bhar said.

"But as those sales dry up, local prices could pick up again and encourage more Chinese imports," he added.

Dealers noted that with the exception of the soon-to-expire August contract, prices for nearby Chinese copper futures were now above prices for material for delivery further in the future, known as backwardation.

"The gap between Shanghai and the LME is narrowing again. You can see it most clearly when the LME tanks and Shanghai doesn't fall as much," a futures trader at a Chinese copper producer said.

Nickel prices also rose, with three-month futures at $26 850/27 000, versus $26 700 and holding short of last week's record $27 300.

South Korean steel producer Posco Co Ltd on Monday dismissed a Wall Street Journal report that it held a loss-making short position of 10 000 tonnes of nickel on the LME and of an additional 20 000 tonnes in the physical market.

A Posco official said the company was short by less than 1 000 tonnes on the LME, and denied the company had speculated on falling nickel prices.

Stocks of nickel in LME warehouses were 5 940 tonnes, of which nearly 3 600 tonnes have already been earmarked for delivery. Daily world nickel consumption is around 3 500 tonnes.

"Nickel availability should improve but in the near term the market looks to remain very tight," a London trader said.

In addition to low stocks and strong demand from stainless steel makers, nickel prices are firm after a strike at Inco, which began shutting down production at the end of July at its 54 000 tonne-per-year, Voisey's Bay nickel mine in Canada.

Aluminium was up $10 at $2 530/ ,535 and zinc gained $30 at $3 290/3 320.

COMEX copper ends near highs amid spread dealings

NEW YORK, Aug 14 (Reuters) - Copper futures in New York ended near their session highs in extremely thin dealings on Monday, as traders focused on the September/December roll while uncertainty over the outcome of the Escondida labor strike held the buyers at bay, sources said.

"Last week, we started our roll from September into December, and while the bulk of it was done last week, some people may have anticipated some more selling to start the week, but when it never materialized and they turned buyers of the spread later in the day, one COMEX floor dealer said.

Copper Rises for 2nd Day in London; Aluminum and Nickel Gain

Aug. 15 (Bloomberg) -- Copper rose for the second consecutive day on the London Metal Exchange. Aluminum and also gained, while nickel matched its all-time high.

Copper for delivery in three months on the LME increased $90.50, or 1.2 percent, to $7,740 a metric ton as of 10:14 a.m. local time. Nickel increased $150 to $27,250 a ton, after earlier trading as high as $27,300, equaling the record set Aug. 11. Aluminum gained $26 to $2,507.

Tuesday August 15

Broker snap: Miners a mixed bag

LONDON (ShareCast) - The mining sector was given a knock today after Lehman Brothers issued a mixed note on the industry, trimming forecasts across the board.

The broker reduced its earnings estimates on BHP Billiton , Rio Tinto, Xstrata and Anglo American, arguing that high commodity prices will offer investors little upside going forward.

Lehman suggests that with a number commodity prices trading near record highs, investors should move their attention from high-risk stocks such as Vedanta to low-risk miners such as Rio Tinto.

The broker kept its "overweight" recommendation on Rio Tinto, BHP Billiton and Xstrata but said Vedanta remains "equal-weight" and Anglo American "underweight".

Aug 15, 2006 (TradeSignals via COMTEX) -- Copper:

Copper trade on ACCESS is showing weaker prices in recent activity reversing the firmer tone seen during the prior session. Trend indicators are indicating a bearish market. However the overall strength of the trend, as indicated by the ADX, is weak and should be watched as a result. Momentum readings are also in bearish territory.


Simple Moving Average (10-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 10-Day simple moving average has a strong bearish bias.


Simple Moving Average (25-Day): Recent activity this morning has seen prices trade below this moving average. Also, the slope of the moving average is in a downward slope from the previous session indicating further weakness. As a result the 25-Day simple moving average has a strong bearish bias.

Aug. 16 (Bloomberg) - Copper Declines in Shanghai on Expectations Escondida Strike May Soon End

Copper fell in Shanghai for the fourth day on expectations that a strike at Escondida, the world's biggest copper mine, may end soon.

BHP Billiton, the world's biggest mining company, and a union in Chile yesterday met for the first time this week seeking to resolve the stoppage, which has slashed production at the site. The two sides discussed vacation and educational benefits, union President Luis Troncoso said yesterday.

``It looks like the talks are going on rather smoothly,'' Yuan Fang, a metal futures trader at Shanghai Dongya Futures Co., said by phone today. ``Given the lack of market news, people are trading on the back of these negotiations.''

Metal for delivery in October fell as much as 530 yuan, or 0.8 percent, to 67,100 yuan ($8,389) a metric ton on the Shanghai Futures Exchange. It traded at 67,480 yuan at 9:30 a.m. local time.

Copper for delivery in December fell 2.4 cents, or 0.7 percent, to $3.4655 a pound in after-hours trade on the Comex division of the New York Mercantile Exchange at 9:29 a.m. Singapore time.

``There is progress,'' Troncoso said by telephone from the city of Antofagasta. ``We will keep talking.''

The company's refusal to meet demands to raise wages by 13 percentage points above inflation, which reached 3.8 percent annually in July, and pay a bonus of 16 million pesos ($29,575) per worker led to the strike, which began Aug. 7.

The walkout cut processing capacity at Escondida by about half, BHP Billiton spokesman Mauro Valdes said yesterday by telephone. The mine, located in northern Chile, accounted for 8.5 percent of all mined copper worldwide last year.

`` I'm encouraged that there is dialogue,'' David Thurtell, a metals analyst at BNP Paribas in London, said. ``At least the talks haven't broken down. That's slightly on the bearish side.''

Copper for three-month delivery on the London Metal Exchange rose $10, or 0.1 percent, to $7,660 a ton at 9:31 a.m. Singapore time.

Copper, Zinc Prices Tumble on Speculation Demand May Slow

Aug. 17 (Bloomberg) -- Copper prices fell the most in a month and zinc tumbled almost 6 percent on signs U.S. economic growth will continue to slow, curbing demand for metals.

Before today, copper had jumped 75 percent this year, partly because of supply disruptions in China, Indonesia and Mexico. The U.S. index of leading economic indicators unexpectedly dropped in July, the New York-based Conference Board said today. That marked the third report this week to show expansion is cooling. Lead, aluminum and nickel also dropped.

``It's a commodity-wide sell-off,'' said Robin Bhar, an analyst at UBS AG in London. ``Fears of a U.S.-led slowdown'' triggered the drop, he said.

Copper for delivery in three months declined $410, or 5.3 percent, to $7,290 a metric ton on the London Metal Exchange, the biggest percentage decline since July 20. Prices still have doubled in the past year. The U.S. is the world's second-biggest copper consumer behind China.

Zinc dropped $199, or 5.9 percent, to $3,201 a ton in London. Prices are up 68 percent this year.

Copper futures for December delivery fell 10.70 cents, or 3.1 percent, to $3.320 a pound on the Comex division of the New York Mercantile Exchange, the lowest since late June.

Speculation that a strike may end soon at the world's biggest copper mine in Chile helped drive prices lower.

The union at the Escondida mine is holding talks with management today to settle the 11-day stoppage.

Workers are seeking a wage increase 10 points above Chile's inflation rate, down from the 13 points above inflation it wanted as recently as yesterday.

Closer to Agreement

``They are closer rather than further away to coming to an agreement,'' said Mark Liinamaa, a metals analyst with Morgan Stanley in New York. ``It's really conciliatory over there. The situation is looking much more approachable to a settlement in the near term.''

BHP Billiton Ltd., which owns more than 57 percent of the mine, can reallocate funds within its salary offer, though it won't increase the value of the package, Illtud Harri, a spokesman for the company in London, said today.

Management also has offered to pay a bonus of 8.5 million pesos ($16,032) per worker. Escondida's Workers' Union No. 1 wants a bonus of 16 million pesos along with the wage increase tied to the rate of inflation, which was an annual 3.8 percent in July.

The strike has cut output by half at Escondida, which produced 8.5 percent of copper from mines worldwide last year. The stoppage is costing the mine as much as $16 million a day in lost profit on average, mine management said yesterday.

``For most of the metals, it's the supply side of the equation that I think is going to be most important to determine price movement from here,'' Liinamaa said.

Industrial Production Slips

Industrial production in the U.S. grew less than forecast in July, a government report showed yesterday. Housing starts fell 2.5 percent to an annual rate of 1.795 million, and building permits declined 6.5 percent, the most since September 1999, the U.S. Commerce Department said in a separate report.

Builders are the biggest users of copper in the U.S, accounting for about 40 percent of demand. An average single-family home contains about 400 pounds of the metal, according to the Copper Development Association.

Today's report is ``suggesting that together with yesterday's weak housing numbers, the U.S. economy is slowing,'' Bhar said.

Lead price in London dropped $42, or 3.4 percent, to $1,185 a ton. Nickel tumbled $1,400, or 4.8 percent, to $27,700. Aluminum declined $41, or 1.6 percent, to $2,460.

DJ Comex Copper Review: Lower On Escondida Strike Rumors

NEW YORK (Dow Jones)--A nervous tone continued to dominate the Comex copper
market as futures prices dipped sharply lower Thursday amid speculation the
11-day strike at Chile's Escondida copper mine ended, despite reports to the
contrary.

At settlement on the New York Mercantile Exchange, Sept. copper is down 11.25
cents at $3.3575 per pound. During the session speculation began to mount that
the strike at Escondida had ended. The talk took the Sept. contract down to a
$3.29 low - its lowest level since July 24.

But soon after the quick sell-off, news from Santiago quoted union leaders as
saying that any strike settlement was days away.

"I want to be very clear about this: The only problem we have (with the
company) happens when we reach the subject of the wage increase," union
president Luis Troncoso told reporters Thursday following a meeting with other
union leaders in the industry.

"The talks have a few more days to go," Troncoso said, adding that Escondida
negotiators have sought to leave the sticking points, such as salaries and
bonuses, to the last possible moment.

Traders at Triland Metals said it appears the union has been making some
concessions and that the market apparently has priced in a settlement within
this week.

They added that U.S. leading indicators showed a drop of 0.1% Thursday,
putting some pressure on the entire metals sector.

"Buying interest was limited and prices dropped below the 100 day moving
average (seen at $3.2929) at one point before recovering on some closing based
orders," the traders said in a report.

Reuters - Fri Aug 18, 2006 12:43 PM - By Nick Trevethan

Copper rises on Escondida mine closure


LONDON (Reuters) - Copper prices bounced in London on Friday after the world's largest copper mine said it was suspending operations as talks with striking workers collapsed.

Copper for delivery in three months traded at $7,470 a tonne at 1001 GMT, versus $7,290 at the close of trade on Thursday.

Copper has recovered over half of Thursday's more than five percent drop after BHP Billiton said it was closing its Escondida copper mine in Chile because workers had blocked access roads to the mine for two days and had put at risk the health and security of people working there.

"We will not negotiate while the union carries out this illegal activity and will be taking legal action to resolve this," a BHP Billiton spokesman said.

Escondida, which churns out eight percent of the world's copper, had been operating at around half speed due to the 12-day strike over pay and bonuses.

"There is a strong element of brinkmanship going on. I don't know what BHP Billiton's negotiating objectives are, but it seems it wants to transfer commodity price risk to the workforce," an LME dealer said.

The union is holding out for a $30,000 special bonus for each worker and a 10 percent raise, citing $2.9 billion net profit at Escondida in the first half of the year. BHP has responded with an offer of 3 percent above inflation and a bonus of around $16,000.

"The pay award will set a benchmark for other labour settlements so there is a question about how much encouragement BHP is getting to take a tough stance from other producers, including government-owned Codelco," the trader said.

Copper Rises as BHP Closes Chile's Escondida, World's Top Mine

Aug. 18 (Bloomberg) -- Copper prices rose after BHP Billiton shut down the world's biggest copper mine and called off talks with a striking labor union as workers blockaded roads to the Escondida site in Chile.

BHP Billiton, the world's largest miner, will take legal action against the union over the obstruction, spokeswoman Emma Meade said. The escalation of the dispute may intensify concern that global copper production can't meet demand. Escondida accounts for 7 percent of global copper usage, based on its first-half output, according to Numis Securities in London.

``There are indications that this could go on for much longer than the market expected,'' said Peter Hickson, global commodities strategist for basic materials at UBS AG in London. The strike may have ``far more impact on what is already a very short copper market.''

Copper for delivery in three months on the London Metal Exchange rose $140, or 1.9 percent, to $7,430 a metric ton as of 1:30 p.m. local time, after earlier rising 3.3 percent to $7,530. The metal, used in wiring and plumbing, has more than doubled in the past year. It rose to a record $8,800 on May 11.

Copper futures for September delivery on the Comex division of the New York Mercantile Exchange gained 4.5 cents, or 1.4 percent, to $3.36 a pound. Prices were down 1.7 percent for the week in New York and 1.3 percent in London. A futures contract is an obligation to sell or buy a commodity at a fixed price for a specific delivery date.

Metals briefly pared gains after China, the world's biggest consumer of copper, raised its benchmark lending and deposit rates to curb an investment boom that the government says threatens to fan inflation and leave the nation with surplus manufacturing capacity.


`Far Apart'

The stoppage at Escondida doesn't constitute a lockout and management wants to resume production ``as early as possible,'' BHP Billiton said. The strike started Aug. 7. Before the mine's closure, production had fallen by about half.

Escondida's Workers' Union No. 1 wants wages increased by 10 percentage points above inflation, which was 3.8 percent annually in July, having reduced an initial demand for a 13- point wage increase. Union leaders have said workers' wages need to reflect the surge in copper prices. BHP has offered a rise of 3 percentage points above inflation.

``Escondida management and the union remain far apart in terms of negotiations,'' said Simon Toyne, an analyst at Numis. ``For all other copper players, Escondida striking is clearly advantageous in the short term.''

The Age' - August 18, 2006 - 4:10PM


BHP Billiton Ltd has closed operations at the world's biggest copper mine and called-off talks with striking workers, sending copper prices soaring.

The world's largest diversified miner said it will abandon the talks in favour of legal action against the workers, who are seeking a larger share of the benefits of spiralling copper prices.

BHP Billiton is due to break its Australian corporate earnings record and post an annual net profit of $US10 billion ($A13.16 billion) when it reports on Wednesday, helped in part by a record annual copper production.

BHP Billiton says workers have blocked all access roads to the Escondida mine, located in Chile's Atacama Desert.

"This heightened union activity means we no longer feel that we are able to unequivocally guarantee the health and safety of our people or the integrity of the operations, infrastructure," said spokeswoman Emma Meade.

"As a result, Minera Escondida has closed its operations and ceased negotiations with the union."

BHP Billiton said it will not negotiate with the union while it is carrying out "illegal activity".

"We will be taking legal action against the union to resolve this," Ms Meade said.

"We will only reopen the operations and restart negotiations when we are comfortable that we can guarantee the health and safety of our people and the integrity of the operations."

The news sent copper prices up by $US160 a tonne.

London Metal Exchange three-month copper futures rose to US7,450 in after hours trading, from to $US7,290 at London close on Thursday.

BHP Billiton said earlier this month that the strike action over pay at Escondida, the largest copper mine in the world, had slashed operating capacity to 40 per cent.

Suspension of cathode production also led to the mining giant declaring a force majeure on its copper concentrate contracts.

A force majeure is a contract clause that would free it from its contractual obligations due to an extraordinary event beyond its control.

Of the mine's 2,930 permanent staff, 2,052 are union members.

Earlier this month workers rejected an offer of three-year contracts including a three per cent rise in pay and bonuses.

It was an improvement over an earlier offer for a 1.5 per cent raise, along with a bonus and low-interest loans, but fell substantially short of a 13 per cent raise and $US30,000 ($A39,408.87) net bonus per worker the union was seeking.

FT.COM -By Chris Flood - August 18 2006 18:20

Copper surges as BHP shuts Escondida


Copper dipped 1.2 per cent over the week to $7,480 a tonne. However a breakdown in negotiations Escondida, in Chile pushed copper 2.6 per cent higher yesterday. Talks between the union and management have broken down and operations at the worlds largest copper mine have been suspended. An estimated 26,000 tonnes of copper production has been lost due to the strike. This has been covered by drawing down from existing stockpiles but shipments are expected to be affected shortly. As LME stocks of refined copper are low and the market remains in a supply deficit, the impact of a prolonged strike could be significant.

The Times - August 19, 2006 - By Carl Mortished, International Business Editor

Copper rises as strikers' blockade forces BHP to shut Chilean mine


STRIKING miners have blocked access to Escondida, the worlds largest copper mine, forcing its operator, BHP Billiton, to stop production and raising the temperature further in a heated metals market.

The shutdown of Escondida, which accounts for 8 per cent of the worlds copper output, pushed up the price of the red metal by $180 per tonne to $7,470 on the London Metal Exchange. Chiles President, Michelle Bachelet, called for talks to resume between the miner and the unions, who are demanding a substantial pay rise and bonuses to reflect the huge profits earned from high copper prices.

In London, the price of nickel gained $300 per tonne as volumes in LME warehouses dwindled further. Chinas largest nickel producer expressed concern that the nickel market was being distorted by speculators and urged the LME to improve regulation.

The LME is no longer a place for fair dealing metals but a paradise of speculation, said Li Yongjun, chairman of Jinchuan Group, the largest nickel producer in China.

Nickel reached a record high of $29,200 per tonne in the forward market as stocks plummeted to less than a days supply. The premium for cash nickel over three-month delivery widened to almost $5,000 per tonne, prompting the LME to introduce emergency rules on Wednesday to allow short sellers to escape the squeeze.

BHPs tough stance with the Escondida strikers may be supported by the Chilean Government, reckoned some analysts, as Escondida pays its workforce the highest mining wages in Chile, and the state copper company, Codelco, will be anxious to avoid a high settlement with its own workers. They wont want to see BHP set a precedent and stoke higher wage claims at Codelco, said Robin Bhar, metals strategist at UBS.

BHP said that it had shut the mine for safety reasons but Pedro Marin, a spokesman for the strikers, accused BHP of trying to scare the workforce. This is illegal pressure, he said.

BHP would not put a timescale on the stoppage, which follows 12 days of reduced output since the strike began. BHP is offering a 3 per cent pay rise plus a bonus of $16,000 (8,500) to each of the mines 2,900 workers. The union, which represents 2,050 miners, is demanding a 13 per cent pay increase and a $30,000 bonus.

The global mining industry is suffering a wave of labour unrest as workers seek to extract their share of exceptional profits from high metal prices.

Associated Press - 08.18.2006, 11:56 PM

Chile Copper Mine Talks to Resume


Workers and management at the world's largest privately owned copper mine agreed Friday to resume talks aimed at ending a 12-day strike.

The agreement was reached in a government-mediated meeting ordered by President Michelle Bachelet. It includes a promise by the workers "to maintain public order," said Julio Manque, who represents the labor ministry in the northern region where the Escondida mine is located.

Workers had blocked the entrance to the mine Thursday evening, triggering clashes with police and prompting the company to break off talks and suspend the mine's limited 40 percent production maintained with contract workers.

On Friday, company representative Pedro Correa said that activity at the mine will resume "but the process takes a while."

President of the workers' union, Luis Troncoso, said he expects an agreement can be reached by Tuesday.

Friday's decision came just hours after Bachelet ordered the labor ministry to offer the government's help to get both parties to talk again. Labor laws do not permit formal mediation by the government.

The Escondida mine, 1,000 miles north of Santiago, produces about 4 tons of copper a day, or 8 percent of world output. Company executives have estimated daily losses from the strike at $16 million.

The 2,052-member union's demand for an across-the-board wage increase was the main hurdle in the talks, Troncoso has said. The workers' original demand for a 13 percent increase was reduced Thursday to 10 percent, but the company has offered 3 percent.

The workers are also demanding a $26,900 end-of-conflict bonus, but the company has offered half that amount, plus low interest loans.

Talks for a new contract also included health and education benefits.

The Australian-British consortium BHP Billiton PLC owns 57.5 percent of the mine, while Rio Tinto PLC, also Australian-British, holds 30 percent, and the Mitsubishi Corp.-led Japanese consortium 10 percent.

Mining Weekly - 21 august 2006

BHP Chile copper mine workers reject new wage offer


Striking workers at the world's largest copper mine rejected a revised pay offer from BHP Billiton, extending a two-week strike in Chile that has cut production by as much as 60%.

The world's biggest mining company is offering more pay and higher bonuses, BHP Billiton spokeswoman Alejandra Wood said from Santiago. The 2 052 workers in the mine's main labor union decided the offer wasn't enough at a meeting late yesterday in Chile, union spokesman Francisco Aedo said.

Prices of copper, used in wires and pipes, have more than doubled in the past year as consumption soared in China, prompting unions to seek a greater share of mining companies' record profits. Mine management said August 16 the dispute was costing owners including BHP Billiton, Rio Tinto Group and Mitsubishi Corp. $16-million in profit a day.

The strike looks like it's going to go on longer than people expected, and in the short-term that's good for copper prices, said Ron Cameron, a resources analyst at Ord Minnett Ltd. in Sydney. They will have to reach a compromise at some stage.

Copper for delivery in October rose as much as 310 yuan, or 0,5%, to 66 7000 yuan ($8 370) a metric ton on the Shanghai Futures Exchange. It traded at 66 520 at 11:30 a.m. local time. It had fallen as much as 0,9% after BHP raised its pay offer.

Shares of BHP Billiton, which owns 57,5% of the mine, rose as much as 40 cents, or 1,4%, to A$28,50 on the Australian Stock Exchange. They traded at A$28,45 at 2:22 p.m. in Sydney. Shares in Rio Tinto, which owns 30%, fell 6 cents to A$75,19. Shares in Mitsubishi fell 0,8% to 2 425 yen in Tokyo.

The company has directed these talks poorly, said Pedro Marin, another union spokesman, in a phone interview from Antofagasta.

BHP Billiton raised its offer to a wage increase of 4 percentage points above inflation, 1 percentage point higher than previously offered, and a bonus of as much as 9,5% pesos ($17,834) for a 36-months contract. If workers sign a 48-months contract, BHP Billiton will raise pay by 1,3% in the fourth year, and pay a total bonus of 13-million pesos.

The Escondida's Workers Union No. 1, which represents 94% of the mine's employees, is seeking a wage increase of 10 percentage points above inflation and a bonus of 16-million pesos ($30,036) per worker for a 36 months contract. Chile's inflation rate was 3,8% in July.

The 4 percent offer wasn't large enough, Marin said. He added that the union was prepared to negotiate on its demand for a 10 percentage points above inflation. He also said the union isn't willing to agree to a four-year contract.

The workers could be in a precarious position if they reject this new offer, said Mark Pervan, head of research at Daiwa Securities SMBC in Melbourne. When you're dealing with a company that's this large and a tough negotiator, this is a good offer.

The strike had already cut capacity at the mine to between 40% and 60%, and led BHP Billiton on Aug. 8 to say it may stop delivery of copper concentrate, which is smelted in refineries to make the metal, to customers in Asia and Europe because of the strike.

The remaining share of the Escondida mine is held by the International Finance Corp. Escondida accounted for 8,5% of all mined copper worldwide last year.