© Reuters. FILE PHOTO: The Codelco El Teniente copper mine, the world’s largest underground copper mine is shown near Machali, Chile
By Fabian Cambero
SANTIAGO (Reuters) – Chile’s powerful unions are headed into contract talks with a hand weakened by the coronavirus pandemic, giving an edge to miners like Codelco, Glencore (OTC:) and Antofagasta in negotiations that could influence wages and benefits for years.
Chile’s generally well-paid copper mine workers argue they should be adequately compensated for working in a riskier environment to keep pits open during the pandemic.
Their position has not found much support, even in a country that was already racked by protests over inequality before the coronavirus hit. Union leaders said it would be harder to achieve wage hikes, bonuses and benefit boosts now that the pandemic has swept through the global copper market and hit profits for miners in Chile, the world’s top producer.
Even the timetables for talks, which differ for each miner and its unions, could slip as companies push to delay the renegotiation of expired contracts until the country emerges from coronavirus lockdown.
“Obviously we are not engaged in collective bargaining at the moment, we are engaged with coronavirus,” Felipe Román, head of the union at Collahuasi, a joint venture of Anglo American (L:) and Glencore (L:), told Reuters.
“And when it comes to the point of negotiating contracts, that will be pretty tough.”
Chile’s miners, plagued by falling ore grades, were already looking to shave costs and boost efficiency during a prolonged period of floundering prices for the red metal. The coronavirus has hardened their resolve.
The copper price plunged to a four-year low in March as demand fell from China, the world’s largest consumer of the red metal and the country first hit by the pandemic. The sinking returns have weighed heavily on balance sheets.
Prices have regained some ground as China begins to reopen. However, unions in Chile acknowledge they may not be able to get the usual contract sweeteners.
“That is the subject of the discussion. We always go with a position adapted to the situation that is being experienced,” said Guillermo Esquivel, head of the union at Antofagasta’s (L:) Zaldívar mine.
“Expectations have to be measured,” he added saying that so far there had been no proposal to advance the talks.
In some recent negotiations, Codelco and others have been trying to reduce expensive perks such as pricey health care plans that often extend to retirement.
Several copper miners have postponed projects to improve ore grades and shore up future production and profits, and analysts said these companies may be less willing to consider performance bonuses or maintain health coverage or other hard-won benefits for workers.
Antofagasta, Collahuasi and Codelco declined to comment on the upcoming contract talks.
The sector has largely remained operational, with measures including distancing and fewer, but longer, shift periods to reduce travel to-and-from the mines.
“Low copper prices and reduced shifts have further complicated the scenario in a country already in crisis,” said Alejandra Wood, executive director at Chilean think tank the Center for Copper and Mining Studies (CESCO).
“Perhaps, for that reason, a space has opened up in which we won’t see these several million (peso) bonuses anymore.”
Wider fears over increased levels of automation by miners keen to boost productivity has also put unions on the defensive.
The talks may also get pushed back by the virus, with the industry firmly behind proposed legislation to delay talk on any contracts that expired during the quarantine until 60 days after the end of a state of catastrophe declared on March 19.
Miners believe that failure to pass that bill could risk holding up talks even further and undermine the “key” mediator role of the government-appointed Labor Directorate, said Diego Hernandez, head of industry body Sonami, which represents mining companies operating in Chile.
“Failure to adopt this sort of measures would risk stalling negotiations,” he said.
The workers are split over a delay. Opponents include the Mining Federation, which brings together most private mining unions, but other labor leaders say a delay could stop companies from using the “pandemic effect” as a negotiating tool.
For now, the union resistance and a lack of political consensus are holding up the bill. Government leaders are keen for the two sides to reach an accord to prevent debilitating strikes like ones that crippled Chile’s copper sector in the past.
“We hope that workers, union leaders and companies can reach agreements that benefit both parties, as has been done in recent years,” Mining Minister Baldo Prokurica told Reuters.