BHP workers at largest copper mine on strike

• Escondida produces over one million tons of copper per year

Workers at the Escondida mine in Chile belonging to the Australian giant BHP Group Ltd. were to go on strike yesterday because they failed to reach a wage agreement, reports Bloomberg.

The union's 2,400 members rejected BHP's proposal for a new three-year employment contract after five days of mediated talks. The strike shuts down an activity that generates about 5% of the world's total copper mined, disrupting BHP's supplies while easing pressure on the price of copper, which has collapsed in recent months as the outlook for the global economy weakens.

BHP officials did not comment on the information published by Bloomberg.

Escondida produces over one million tons of copper per year, being by far the largest supplier of copper. Some analysts believe BHP Group will overtake Codelco this year to become the world's largest copper producer.

While collective bargaining in Chile is often completed with last-minute agreements, Escondida has been the scene of lengthy strikes in the past, including one that lasted 44 days in 2017.

The price of benchmark copper traded on the London Metal Exchange (LME) rose to record highs in May as bullish investors bet on a supply shortfall. This encouraged unions to claim a share of the windfall for their members. But prices have since fallen by about 19%, as companies look to avoid large increases in fixed costs in a cyclical and capital-intensive business.

However, the negotiations at the Chilean mine come at a time of global crisis in copper concentrate - the raw material produced at Escondida and used to feed the smelters - even though the market for the refined metal is well supplied for now.

On the final day of mediated talks, BHP offered a signing bonus of 27 million pesos ($28,900) per worker, as well as benefits improvements. The workers, however, demanded a bonus of more than 30 million pesos and a share of the profits.