No light at end of tunnel in miners' strike

While the Chilean government has stepped in to try to help restore dialogue between 2,000 strikers and management at the foreign-controlled Escondida mine, site of the world's largest copper deposits, experts are closely following the related fluctuations in the price of the metal. The workers' strike was on its 17th day on Aug. 23, following the company's rejection on Aug. 22 of the union's final wage proposal. The miners say their demands are justified in the context of the enormous profits raked in by the copper industry in the past three years, as the price shot up from 80 cents a pound to the current $3.40 a pound, largely driven by demand from China. In the first half of the year, Escondida–the world's largest private copper producer–recorded profits of $2.9 billion, three times what it made during the same period in 2005. By the end of 2006, the company could be looking at up to $7 billion in earnings, according to some estimates. The company broke off negotiations on Aug. 22, rejecting the union's scaled-down demands of an eight-percent wage increase and a bonus of about $20,000. Union president Luis Troncoso said the workers will respond by pursuing the fight "to the bitter end." On Aug. 21, 98 percent of the 2,052 strikers employed by the mine, which is located in the region of Antofagasta, about 800 miles north of Santiago, rejected the company's last attempt to resolve the dispute that broke out on Aug. 7. The company had offered a four percent salary increase and productivity bonuses for workers. The union at the time countered with demands for a 10 percent salary increase, in addition to higher bonuses. The miners had initially requested a 13 percent pay raise. Miners in Chile generally earn about $950 a month. The striking miners said it was "unfortunate" that, as of Aug. 22, the company was set to take advantage of Chilean labor laws that permit it to hire replacement workers and negotiate with individual workers outside of the collective bargaining unit, actions that could seriously undercut the movement. The workers said they planned to file a legal complaint on Aug. 23, accusing the company of union-busting, after reports that supervisors had telephoned several unionized workers and threatened to fire them. Australian mining giant BHP Billiton holds a 57.5 percent stake in the Escondida mine, which produces 1.3 million tons of copper annually. The remainder of the shares are distributed among British-based Rio Tinto, the JECO Corporation, a Japanese consortium headed by the Mitsubishi Corporation, and the World Bank's International Finance Corporation. The open-pit mine, which produces copper concentrate, accounts for eight percent of the world's copper production and more than a fifth of Chile's output. Throughout the strike, numerous demonstrations have been held, including road blocks and tire-burning across the mine's access routes, in downtown Antofagasta and at the port of Coloso, where the metal is exported. And since the very start, workers have been camped out at the mine's sports complex. The most violent confrontations occurred Aug. 17 at the mine entrance, where some 400 workers clashed with police, prompting the company to shut down operations indefinitely. Up to that point, the mine had continued to operate at 40 percent capacity. While the Chilean government had largely kept to the sidelines, on Aug. 18 President Michelle Bachelet asked Labor Minister Osvaldo Andrade to try to bring the two sides closer together. But so far no significant progress has been made on that front. Andrade said the strike would not affect the country, and underscored that Chile has fewer labor conflicts than other countries. He also dismissed the idea that the Escondida strike would color future collective negotiations in other mining companies. However, there is some concern about the strike's repercussions on the state-run National Copper Corporation (Codelco), which enters talks with workers in September. By Aug. 17, Escondida had lost $100 million, and the strike's daily cost is estimated at between 15 and $20 million. The company has assured that its reserves will be sufficient to meet international commitments. Copper prices on the London Metal Exchange (LME) were unaffected by the strike two weeks ago, closing at $3.42 per pound, down 4.7 percent from the previous Friday. However, the outlook changed on Aug. 21, when prices climbed 0.60 percent to $3.44 per pound. Aug. 22 saw prices up another cent per pound, according to the Chilean Copper Commission. Nevertheless, the director of the Catholic University's Mining Center, Gustavo Lagos, said the Escondida strike would not drive up international copper prices, because the shutdown of the mine would be offset by slow growth in the United States. The expert even predicted a downturn in copper values over the next few days. "Additional consequences of the strike include the fact that the treasury is losing $4 million per day in taxes, including royalties, and the shutdown's effect on the Monthly Economic Activity Indicator and gross domestic product," said Lagos. Carmen Espinoza, head of the non-governmental Labor Economy Program (PET), said that the strike at Escondida is "a valiant effort to improve the distribution of wealth in an industry that has made huge profits in recent years." The lawyer suggested that the company has not wanted to give in to miners' demands for fear of setting a "symbolic precedent," as in her opinion even a 30 percent increase in worker salaries would not cut significantly into the company's profits. "The company wants the workers to accept whatever it offers. That's why, when the union rejected its proposal, it shut down production. The miners are aware that this is a political struggle, and that they are risking their jobs. I think they are making a generous sacrifice on behalf of all workers," said Espinoza. She also criticized the Chilean media's coverage of the dispute, as the press has focused on the idea that miners already earn more than other laborers in Chile, implying that the union's demands are out of line. "First, miners earn less in Chile than they do in other countries. You also have to factor in the significant physical and mental effort and other consequences, given that they work at high altitudes, away from their families and under intense pressure to produce," she explained. Similarly, Espinoza charged that Escondida employees have received only weak support from other social organizations and unions, which she said have focused on the surface of the conflict–the wage negotiations. "The root problem is the distribution of wealth, and how to establish mechanisms to improve it," she concluded.