Strike at the worlds largest copper mine

Workers at the world's top copper mine, BHP Billiton's Escondida in Chile, launched what they vowed would be a "long and hard" strike Thursday, causing jitters on world commodity markets.
Escondida is the first of several key mines worldwide where contracts expire this year, and markets are watching nervously to see how the strike impacts supply and prices.
"The company is sticking to its inflexible stance. This will be a tough fight," said Carlos Allendes, spokesman for the Escondida miners' union.



"This could go on for a long time. We're prepared to maintain a long and hard strike."
BHP Billiton, one of the world's leading mining consortiums, has rejected workers' demands for a seven-percent raise and bonuses of 25 million pesos (around $39,000).
It is offering bonuses of eight million pesos, with no raise.
Like other miners, the Anglo-Australian company has had to cut costs as copper prices slid in recent years, from a record high of $10,190 per metric ton in February 2011 to $4,318 per ton in January 2016, to just over $6,000 today.
Ninety-nine percent of Escondida's 2,500 workers voted Tuesday to strike, after government-mediated negotiations collapsed.
Workers have set up a protest camp outside the giant mine complex in the Atacama desert in northern Chile.
They say they have a war chest of $390,000 to sustain the strike.
BHP Billiton, Escondida's majority owner, has said it will suspend production for at least the first 15 days of the strike.
It urged employees to remain peaceful.
- 'Symbolic weight' -
Escondida produces five percent of global copper output, some 927,000 metric tons (one million tons) a year.
A strike at Escondida is important not just for the immediate effect on production and global balances, but also because it carries symbolic weight," said analyst Dane Davis of Barclays.
Eight other major copper mines in Chile and around the world also face expiring contracts this year. That means the Escondida negotiations will be seen as a bellwether.
Including Escondida, the mines account for around 12 percent of the world's total copper supply.
Uncertainty is also clouding the outlook at the world's second-biggest copper mine -- Grasberg in Indonesia -- where a smelters' strike and regulatory snags have forced the majority owner, US firm Freeport-McMoRan, to announce production cuts.
Other experts however sought to put the Escondida strike in perspective.
"It is worth noting that strikes in 2011 and 2006 lasted two and four weeks, respectively. This, combined with high copper inventory levels, will likely reduce the impact strike action would have on the copper price," analysts at Natixis bank said in a note.
Chile's mining minister, Aurora Williams, said it was hard to gauge the impact.
A strike at Escondida is important not just for the immediate effect on production and global balances, but also because it carries symbolic weight," said analyst Dane Davis of Barclays.
Eight other major copper mines in Chile and around the world also face expiring contracts this year. That means the Escondida negotiations will be seen as a bellwether.
Including Escondida, the mines account for around 12 percent of the world's total copper supply.
Uncertainty is also clouding the outlook at the world's second-biggest copper mine -- Grasberg in Indonesia -- where a smelters' strike and regulatory snags have forced the majority owner, US firm Freeport-McMoRan, to announce production cuts.
Other experts however sought to put the Escondida strike in perspective.
"It is worth noting that strikes in 2011 and 2006 lasted two and four weeks, respectively. This, combined with high copper inventory levels, will likely reduce the impact strike action would have on the copper price," analysts at Natixis bank said in a note.
Chile's mining minister, Aurora Williams, said it was hard to gauge the impact.
Stockpiles in China can last for several days, maybe one week… but not enough for a longer period like two or three months," she told AFP.
Still, the recent jump in Chinese copper imports -- up 30 percent month-on-month in December -- may soon fizzle.
China's growth is slowing, the government is seeking to shift to a consumption-led economic model, and its recent infrastructure splurge "cannot be maintained," said Wu.
"That would clearly indicate a slowing demand for copper."

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