Mine workers dig in on wages, pensions, benefits – by Brenda Bouw (Globe and Mail – July 6, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Brenda Bouw is the Globe’s mining reporter.

Mine workers are flexing their muscles amid surging commodity prices and increased labour shortages, setting the stage for more union unrest.

Workers at some of the world’s largest copper, gold and coal mines have either walked off the job or are threatening to strike, pushing demands for higher wages, and better job security and benefits.

The labour activism is playing out worldwide, from rolling strikes at Australian coal mines jointly owned by BHP Billiton Ltd. and Mitsubishi Corp., to walkouts at Freeport-McMoRan Copper & Gold’s giant Grasberg mine in Indonesia. African gold producers AngloGold Ashanti Ltd. and Gold Fields Ltd. are also facing labour action, as is Chile’s state-owned copper giant Codelco.

Mining companies are trying to hold their ground to prevent a further spike in costs, at the same time maintaining output levels to capitalize on near-record prices for gold, copper, silver and coal. Prolonged strike action could lead to production shortages that would in turn drive up prices for resources as it did with nickel last year following lengthy strikes by workers at Brazilian mining giant Vale SA’s Canadian operations.

Today, some mining companies have been quick to settle contracts to avoid disruption and bad blood, while others are fighting back, with at least one arguing the job actions are illegal and that commodity prices, while high, remain volatile.

So far, workers appear to be making headway due largely to the steady rise in commodity prices, despite a pullback in recent weeks.

Vancouver-based Teck Resources Ltd. avoided job action at its Fording River mine in British Columbia after recently signing a five-year contract with the union. The deal came after a two-month strike at Teck’s nearby Elkview operation that ended in April.

The loss in production from that strike is partly behind Teck’s lower coal guidance announced in June. The company is also taking a $40-million one-time charge related, in part, to better pension and post-retirement benefits from its two union agreements signed this spring.

“The miners are giving in to the worker and union demands to avoid an extended period of production upset,” BMO Nesbitt Burns analyst Tony Robson said. “And the reality is they can afford to pay for it.”

Still, miners face many more challenges when it comes to labour. Not only do workers want more money and better benefits, but companies must contend with a shortage of workers as they try to increase production and build new mines to meet growing global demand.

A shortage of skilled workers can be equally costly for miners.

“It can lead to disruptions in operations,” Mr. Robson said. “There are complications when you have to constantly retrain and reposition your workforce, including lack of continuity.”

Take for instance Cliffs Natural Resources, which said recently a big challenge is the high 40-per-cent labour turnover in Australia, one of the hottest mining production regions of the world. Barrick Gold Corp. has reported a 30-per-cent employee turnover rate in Western Australia, as it competes for workers with other larger miners in the region.

The world’s largest gold producer also said rising inflation in Argentina led to a 35- per-cent raise for its workers in that country, which is along the lines of pay increases being offered by other major miners there.

Workers are using job action as a way to remind companies that their value, given their skills, is becoming harder to come by. What’s more, they want a piece of the growing profits being earned by miners as mining firms grow through international consolidation.

Now that more and more mines are owned by foreign companies, union leaders say workers feel the need to work harder to ensure their compensation and working conditions are protected. Others are looking for more equal pay and benefits across continents.

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/globe-investor/mine-workers-dig-in-on-wages-pensions-benefits/article2087766/page2/