World copper prices up more than four times in three years could spike higher given continuing industrial action by workers at Chile’s Escondida mine. This is the world’s largest, producing eight per cent of global supply.
But output is down to 40 per cent of normal after a week-long miners’ strike which has forced majority shareholder BHP-Billiton to declare force majeure on copper contracts, freeing it from penalties for failure to live up to obligations.Miners have shown no inclination to return, cancelling talks due for Friday and continuing to blockade the site with rocks and tyres. They want a 13 per cent pay rise and a one-off productivity bonus of $30,000 for each worker. Employers offered a three per cent rise and a bonus of up to $15,000. At the heart of the dispute is a massive jump in copper prices, climbing more than 80 per cent since late 2005. Workers want some of the increase but mining companies seek to protect themselves against the next downturn in prices.Markets worry that any pay award could flow onto employees at other sites, particularly in Chile. The world’s largest copper producer, Chile’s state-owned Codelco, is due to start negotiations with its workforce in coming months. With dwindling reserves at Escondida, and world demand buoyant, any major increase there could have consequences pushing world prices well beyond $8,000 dollars per ton.