Strikes could undermine resources output
By Andrew Trounson
29mar06
STRIKES are looming as a threat to global mine output as mine workers ramp up their demands for wage increases to secure their cut from record high metal prices.
BHP Billiton, the world's largest miner, is facing potential strike action from early next month at its Ekati diamond mine in Canada's far north, while a strike by over 1000 workers at Mexico's La Caridad copper mine is supporting prices near record highs.
"The power of unions in the global mining industry should not be underestimated," Macquarie Equities said in a report this week, adding that "2006 is shaping up to be an important year for labour negotiations as demands will be greater, making negotiations more difficult".
But in Australia, the threat of disruption appears low, with miners paying up to secure skilled workers who are thin on the ground in the wake of an upsurge in new developments.
At Xstrata's big Mount Isa mining operation in Queensland talks are under way with unions on new enterprise bargaining agreements (EBAs), with the Swiss-based global miner having no intention of risking relations by pushing for individual contracts, or so-called Australian Workplace Agreements.
Under the Mount Isa EBAs, wage rises are benchmarked against the wider industry in a mechanism that delivered workers there increases of between 5 per cent and almost 8 per cent this year.
"Wages are reasonably fair at this point in time," the national president of the Australian Workers Union, Bill Ludwig, said, adding that union negotiations were delivering "solid" outcomes.
"There isn't much pressure from the employer side for negotiating anything downward," he said.
"You can hardly say the (Australian) industry isn't meeting the market in terms of salary and conditions. It is a buyer's market out there," said Mitchell Hooke, chief executive of industry body the Minerals Council of Australia. But overseas, in places such as South America, labour relations are shaping as a flashpoint.
"As producers report unprecedented levels of earnings and cash flow, workers are demanding pay rises which, in some cases, make the operation unviable," Macquarie said. "Therefore, labour contract negotiations break down more often than not, resulting in strike action."
Macquarie has calculated that there are 15 major labour contracts to be negotiated this year at key mines globally, with copper mines the most exposed, followed by nickel and aluminium.
It warns that up to 3.1 million tonnes of copper, or 17 per cent of global output, could be affected by labour talks this year. "Given low inventory levels across most commodities and many operations running at full capacity, any temporary hiccup in supply can lead to price spikes," it said.
BHP is due to start wage talks at its giant Escondida copper mine in Chile in June, with unions saying they will be claiming "substantial improvements".
At the Ekati mine, BHP managed to head off a strike set for today by agreeing to bring forward mediation talks to April 5 and 6.
But the union representing 400 workers at Ekati is still threatening to strike from April 7 if BHP fails to convince it that it is serious about addressing its demands.
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