BHP resolves pay dispute at Escondida mine, secures copper supply

BHP has successfully negotiated a new agreement with the union at the Escondida copper mine in Chile, following a brief strike that was triggered by a pay dispute. The union's initial demand was for a bonus equivalent to 1% of shareholder dividends, amounting to approximately $35,000 per worker. BHP's initial offer of $28,900 was increased to around $32,000, along with an additional $2,000 in soft loans, to resolve the tensions. The new deal includes significant changes to labor conditions, such as optimizing shift changes and increasing equipment utilization, while ensuring compliance with Chile's 40-hour workweek law. The resolution of this dispute is crucial, as the Escondida mine plays a vital role in global copper production, with over 60% of its output directed to Chinese smelters. During the strike, copper prices experienced a spike but fell by 0.7% to $9,081 per metric ton once the agreement was reached, remaining below the peak of $10,597 per metric ton recorded in May. The last strike at Escondida in 2017 had a significant impact, causing a 7.5% decline in global copper supply that year. The resolution of this pay dispute has averted a potential crisis in Chinese copper production, ensuring stability in the copper market. However, concerns about the heavy reliance on Chinese smelting capacity persist, as any significant diversification away from China could create substantial challenges for Western economies.